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Brazilian meat giant JBS S.A. continues to struggle with its plan to list its shares in the U.S., but may finally get over the hump.
Chief Financial Officer Guilherme Cavalcanti said the world’s largest meat producer decided to allow holders of American depositary receipts to vote on the transaction, but is still trying to appease U.S. regulators and politicians before submitting its plan to a vote. JBS S.A. is facing attacks from at least 15 senators including Democrats Elizabeth Warren and Cory Booker, and Republicans Marco Rubio and Josh Hawley.
JBS S.A. announced its dual listing strategy last year. CEO Gilberto Tomazon said a dual listing could accelerate its capacity for diversification and growth into more branded and value-added food products, reduce the cost of capital and generate greater returns for shareholders, while creating opportunities for the communities where the company operates. JBS operates a diversified, global food production platform, with operations and commercial offices in 24 countries, and over 330,000 customers in more than 190 countries. Established in Brazil 70 years ago, nearly 60% of its global workforce resides in Brazil, producing food and related products in more than 130 production facilities spread across all regions of the country. The company also has significant operations in North America, Europe, the UK, Australia and New Zealand.
On Wall Street, BMO Capital has an Outperform rating on JBS S.A.’s shares in Brazil. Analysts Andrew Strelzik sees meaningful upside potential and pointed to improving fundamentals across the company’s diverse portfolio and multiple expansion opportunities. Meanwhile, Truist Securities is out early with a Buy rating on JBS S.A.’s U.S. listing and a 12-month price target of $14. The firm’s positive thesis is based on JBS riding the global protein wave, commodity market normalization post-pandemic, and JBS carrying out their proven strategy of accretive M&A and sustainable organic growth. Truist expects the U.S. listing to be finalized in the early part of 2024 and for the stock to attract attention. “Due to the company’s revenue base, market cap and dearth of similar companies, we expect addition to at least one index to occur in the first year and for potential addition to the S&P 500 index within the next 1-2 years,” previewed analyst Bill Chappell.
JBS Foods S.A. is expected to go public with a market cap of around $11B, which is smaller than the caps for Archer Daniels Midland (ADM) at $37.1B, Bunge Global S.A. (BG) at $13.9B, and Tyson Foods (NYSE:TSN) at $15.7B, but larger than BRF S.A. (BRFS) at $4.45B and Pilgrim’s Pride (NASDAQ:PPC) at $6.7B.
