JBS, S.A. shareholders agree to sue Joesley and Wesley Batista

JBS, S.A. shareholders agree to sue Joesley and Wesley Batista
JBS USA will hold its third quarter 2020 earnings conference call for the investment community this coming Friday, Nov. 13, 2020.   There’s more than just the usual financial news to talk about.  CEO Gilberto Tomazon has already told financial analysts that plans dating back to 2015 for an initial public offering (IPO) of JBS USA shares are back on, but there isn’t enough time to get it done in 2020.

SÃO PAULO, BRAZIL-based JBS, S.A, with annual revenues of around $50 billion and 230,000  employees around the world, acquired Swift & Co. in 2007 and turned those assets into JBS USA.   It has spent the last five years looking for the right moment to spin them off, but the drama at the parent company keeps getting in the way.

During the past week, for example, JBS S.A. shareholders voted to sue the Batista brothers, Joesley and Wesley, for losses they incurred after the brothers confessed to bribing thousands of public officials in Brazil.

JBS USA,  based in Greeley, CO, has customers in more than 100 countries around the world.  

It is a leading beef and pork processor in the United States, and the majority shareholder of the U.S. and Mexican poultry producer, Pilgrim’s Pride Corp, and poultry producer Moy Park in the U.K. and Europe.   It also a leading processor of beef, lamb, pork, and prepared foods in Australia, and a top beef processor in Canada.  

 JBS USA also recently settled their involvement in a lawsuit that accused the company of conspiring with other meat processors to fix prices for pork.

JBS reached an agreement with distributors and food service operations to resolve all claims.  “While JBS USA denies the allegations in the lawsuit and does not admit any liability, we believed a settlement was in the best interests of the company,” it said.

Friday’s financial conference gives JBS USA an opportunity to disclosed the amount of the settlement.

Agri Stats, Clemens Food Group LLC, Hormel Foods Corp., Indiana Packers Corp., Seaboard Foods LLC, Smithfield Foods Inc., Triumph Foods LLC, and Tyson Foods Inc. are also parties to the litigation in U.S. District Court for Minnesota.  

Consumer and retail litigation over alleged pork price-fixing is not part of the Minnesota case.

Brazil police and prosecutors in 2017 said the Batista brothers sold JBS S.A. shares as part of a scheme to bribe almost 2,000 public officials, including federal meat inspectors and knowing the sales would cause share prices to fall.

Those stunning disclosures were detailed in the plea agreement between the brothers and prosectors.   The revelations caused a sell-off of JBS, S.A. stock,  lowering prices.   The Batista repurchased shares at the lower prices.

The largest minority shareholder in JBS, S.A. is known as BNDESpar.  It also wants to be made whole by the controlling stockholders.

As for the Batista brothers, they were banned from holding management positions in companies owned by the family investment company, known as I&F Investments.   However,  they’ve been allowed back for being “essential” to those companies because of the COVID 19 pandemic.

The key part of the Batista brothers 2017 “leniency agreement” with the Brazilian government was their willingness to pay a $1.9 billion fine.   That fine is the largest in their country’s history.

On  Oct. 30,  about 72 percent of JBS, S.A. shareholders voted to sue the brothers.  The Batista block did not vote,   The shareholder vote was to hold  Wesley and Joesley Batista, the heirs of the company’s founder, responsible for the stock losses.

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