JBS USA could be considering public offering
March 27, 2015
News media from Brazil to New York are abuzz with talk that JBS SA, the world's largest meatpacker, will take public its Greeley-based USA affiliate, JBS USA holdings.
That would mean a multimillion initial public offering in the United States for the meatpacker.
In 2009, the company, just two years into its acquisition of the meatpacking plant in Greeley, had planned a $2 billion public offering, proceeds from which would be used to expand the company's business by creating what is called "case-ready" beef. That move would have essentially cut out the local grocery butcher by delivering pre-cut and packaged meat to the stores directly.
Company officials, however, pulled back on their intentions, withdrawing their request to the Securities and Exchange Commission a year later.
According to Bloomberg, the pullback was because "Brazilian markets offered better valuations."
Bloomberg reported that anonymous sources within the company have said the company is revisiting the IPO idea, mostly to pay off debt and achieve an investment-grade credit rating. The global company's debt in U.S. dollars stood at $9.4 billion, according to its fourth-quarter earnings report.
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That's a $1 billion reduction from the third quarter of last year. The debt, however, has stayed steady from last year at the same time. JBS has not yet filed anything with the SEC in regard to a public offering.
JBS SA CEO Wesley Batista, in the company's year-end earnings report, discussed the company's desire to shore up perceptions.
"We feel confident that the market has an increasing better perception of our business and our strategy," Batista reported in the fourth-quarter report. "Our results for 2014 show that we are going in the right direction. In 2015, we will prioritize organic growth, and focus on all aspects of improving our financial metrics. …"
JBS came onto the U.S. scene from Brazil, buying the struggling Greeley beef plant in 2007, immediately adding a second shift to its production schedule and adding 1,100 employees to the plant — a huge boost from three years prior, when previous owners cut that shift and laid off 800 employees. The company has been in acquisition mode since, acquiring companies all over the world, including a second Australian company last year, and XL Foods in Canada in 2013, which has become JBS Foods Canada in Brooks, Alberta, Canada.
JBS representatives contacted this morning said the company had "no comment at this time."
JBS USA is a subsidiary of the publicly listed Brazilian-based JBS SA, which is traded on the Sao Paulo Stock Exchange, in the Novo Mercado segment.
JBS USA Holdings Inc. holds a 75.3 percent controlling interest in Pilgrim's Pride Corporation, which is publicly listed on the NASDAQ Stock Market.
JBS USA accounts for 66 percent of the South American's business's revenue and 59 percent of its earnings, according to fourth-quarter earnings reports.
–reprinted with permission from the Greeley Tribune