425: JBS S.A. Shareholders Approve Dual Listing on NYSE and B3, Paving Way for Global Growth and Capital Access

JBS S.A. shareholders have overwhelmingly approved a corporate restructuring and dual listing plan, which will establish JBS N.V. as the ultimate holding company and enable trading on both the New York Stock Exchange and Brazil's B3, alongside a R$1.00 per share cash dividend.

Summary

• JBS S.A. shareholders approved a corporate restructuring and dual listing plan on May 23, 2025, with JBS N.V. becoming the ultimate holding company.
• The plan involves JBS N.V. Class A common shares listing on the New York Stock Exchange (NYSE) and Brazilian Depositary Receipts (BDRs) representing these shares trading on the So Paulo Stock Exchange (B3).
• The restructuring includes a merger of JBS S.A. shares into JBS Participações Societárias S.A., with JBS S.A. shareholders receiving one mandatorily redeemable preferred share of JBS Participações for every two JBS S.A. shares, which will then be exchanged for BDRs.
• The book value of JBS S.A.'s shareholders' equity as of December 31, 2024, was appraised at R$44,780,867,425.93.
• A cash dividend of R$1.00 per share, totaling R$2,218,116,370, was approved, payable from profit reserves as of December 31, 2024, with the ex-dividend date set for May 26, 2025.
• The ultimate controlling shareholders (J&F and FIP Formosa, indirectly through LuxCo) will maintain their economic interest in JBS N.V. but may see an increase in voting power due to the dual-class share structure (Class A and Class B shares).
• The Class A and Class B shares of JBS N.V. will have the same economic rights, but Class B shares will grant ten votes per share.
• A Class A Conversion Period is established until December 31, 2026, allowing eligible shareholders to convert Class A shares into Class B shares, subject to a 55% maximum conversion rate and a 20% minimum free float for Class A shares.
• The dual listing is contingent on approval of Class A shares for listing on the NYSE and approval of the Sponsored Level II BDR Program by the CVM and B3.
• BNDES Participações S.A. (BNDESPar), the largest minority shareholder (20.8% of total share capital), abstained from voting on the dual listing due to a separate agreement with J&F regarding potential remuneration up to R$500 million if certain share price appreciation targets are not met by December 31, 2026.

Sentiment

Score: 8

Explanation: The document outlines a strategic corporate restructuring aimed at enhancing global presence, unlocking shareholder value, improving financial ratings, and expanding access to capital markets. The approval of a cash dividend further adds a positive note for shareholders. While there are complexities with the dual-class share structure and conditions precedent, the overall tone and stated objectives are highly positive for the company's long-term strategic positioning and growth.

Positives

• The dual listing aims to adapt JBS S.A.'s corporate structure to its global profile, potentially unlocking shareholder value.
• It is expected to expand investment capacity, strengthening conditions for growth and competition with global peers.
• The transaction is anticipated to improve JBS S.A.'s rating indexes and increase its visibility within the global investor community.
• It will broaden access to a larger investor base and increase flexibility to use equity as a source of financing, potentially reducing reliance on debt for growth.
• The dual listing is expected to reduce the company's cost of capital.
• The approval of a R$1.00 per share cash dividend provides immediate return to shareholders.

Negatives

• The capital structure of JBS N.V. will differ from JBS S.A., potentially increasing the voting power of controlling shareholders (LuxCo) compared to non-controlling shareholders due to the dual-class share structure.
• The agreement between J&F and BNDESPar, which includes potential remuneration for BNDESPar up to R$500 million based on share price appreciation, could be perceived as a preferential arrangement for a large minority shareholder.

Risks

• Risks relating to the completion of the Proposed Transaction on anticipated terms and timing, including obtaining shareholder and regulatory approvals.
• Anticipated tax treatment may differ from actual outcomes.
• Unforeseen liabilities could arise.
• Future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, and future prospects could differ materially from forward-looking statements.
• Business disruption, operational problems, financial loss, and legal liability to third parties could result from material differences in actual results compared to forward-looking statements.
• The dual listing is subject to non-waivable conditions precedent, including NYSE listing approval and CVM/B3 approval of the BDR program and JBS N.V. foreign issuer registration; failure to meet these conditions would nullify the resolutions.

Future Outlook

The dual listing is expected to enable JBS to better reflect its global presence, implement its growth strategy, improve its rating indexes, and maximize shareholder value. It aims to strengthen corporate governance, increase visibility among global investors, expand access to a larger investor base, and provide greater flexibility for equity financing to support future growth, ultimately reducing its cost of capital. The current operating and managerial structure of JBS S.A. is not expected to materially change.

Management Comments

• Management believes the dual listing will allow JBS S.A. to better reflect its global presence and international operations, and implement its growth strategy.
• Management expects the dual listing to improve JBS S.A.'s rating indexes and maximize value for its shareholders.
• Management anticipates the dual listing will strengthen corporate governance and increase visibility among the global investor community, improving comparability with main peers.
• Management believes the dual listing will expand access to a larger investor base and increase flexibility to use equity as a source of financing, reducing the need for new debt to support growth.
• Management expects the dual listing to reduce the company's cost of capital.
• Management stated that the transaction will not materially change the current operating and managerial structure of JBS S.A., with operating assets, employees, financial flows, and logistic chains remaining as they are.

Industry Context

This dual listing positions JBS to enhance its global competitiveness by aligning its corporate structure with its international operations. By listing on the NYSE, JBS aims to improve its comparability with major global peers in the food processing and meat industry, potentially attracting a broader international investor base and accessing more flexible equity financing options. The move reflects a broader trend among large multinational companies seeking to optimize their capital structures and market visibility to support global expansion strategies.

Comparison to Industry Standards

• The dual listing aims to improve JBS's comparability with its main global peers, suggesting a move towards aligning with international industry standards for corporate structure and investor access. Specific comparable companies or projects are not named in the document.
• The introduction of Class A and Class B shares, with differential voting rights (one vote vs. ten votes per share), is a corporate governance structure seen in other global companies, often used to maintain control by founding families or strategic investors while accessing public markets. No specific comparable companies are mentioned in the document.

Corporate Governance

Legal Proceedings

• The company is involved in judicial and administrative proceedings, predominantly in Brazil, related to labor, civil, tax, and social security matters. Management estimates the probability of adverse outcomes and recognizes provisions when losses are probable.
• A provision of R$4,714,311 was recognized for potential divergences in tax positions related to taxation of profits from foreign affiliates in countries with international treaties.
• The company has a provision of R$1.49 billion related to FUNRURAL installments due to a Brazilian Supreme Court decision, with cash settlements and offsets against recoverable tax balances already made. The company awaits final judgment minutes and potential modulation of effects.

Related Party Transactions

• JBS S.A. has related party receivables of R$494,268,879.50 and payables of R$10,834,038,914.04 as of December 31, 2024.
• The company has an agreement with Banco Original (a related party) for the acquisition of receivables, resulting in R$302,815 in financial costs for the fiscal year ended December 31, 2024, and R$327,246 in cash and equivalents as of December 31, 2024.
• JBS has cattle purchase commitments for future delivery with JBJ Agropecuária (a related party), with JBJ advancing financing through banks in a reverse factoring arrangement, amounting to R$299,200 as of December 31, 2024.
• The company engages in bovine by-product purchasing operations with Prima Foods S.A. (a related party).
• JBS is the sponsor of the J&F Institute, a business school, and made donations totaling R$106,472 to it in 2024.
• JBS is a member of the JBS Fund for the Amazon, a non-profit, and made donations totaling R$12,025 to it in 2024.
• Original Corporate Corretora de Seguros Ltda. (a related party) is included in JBS's panel of insurance brokers, with contracts under standard market conditions.
• On December 30, 2024, JBS entered into an agreement to sell its Hygiene and Beauty operation to Flora Produtos de Higiene e Limpeza S.A. (a related party) for R$315 million, subject to working capital adjustments. This operation was not classified as discontinued as it represents only 0.2% of net assets.
• On June 26, 2024, JBS entered into an agreement with Âmbar Hidroenergia Ltda. to form a consortium for joint operation of power plants, with JBS S.A. holding 99% participation.

Stakeholder Impact

• **Shareholders**: The dual listing aims to unlock value, expand investment capacity, and potentially reduce the cost of capital, which could benefit shareholders. The approved cash dividend provides immediate return. However, the dual-class share structure may concentrate voting power with controlling shareholders, potentially diluting the voting influence of non-controlling shareholders.
• **Employees**: The transaction is stated not to change the current operating and managerial structure of JBS S.A., implying no material impact on employees or their roles.
• **Customers & Suppliers**: Operational assets, financial flows, and logistic chains are expected to remain unchanged, suggesting no direct material impact on customers or suppliers.
• **Creditors**: The dual listing aims to increase flexibility for equity financing, which could reduce the need for new debt, potentially improving the company's financial health and credit profile over time, benefiting creditors.

Next Steps

• JBS N.V. will proceed with obtaining registration as a foreign issuer with the CVM and having Brazilian Depositary Receipts (BDRs) admitted to trading on B3.
• JBS N.V. will complete its registration as a foreign private issuer (FPI) with the SEC and have its Class A Shares admitted to trading on the New York Stock Exchange (NYSE).
• The second step of the Controlling Shareholders Contributions will occur, where J&F will pay in JBS S.A. common shares to JBS Participações, and then contribute these shares to LuxCo and subsequently to JBS N.V.
• The Merger of Shares will be implemented, resulting in JBS S.A. becoming a wholly-owned subsidiary of JBS Participações.
• The Redeemable Shares issued by JBS Participações will be immediately redeemed for BDRs.
• The ADRs Depositary Bank will cancel BDRs and deliver underlying Class A Shares to ADR Holders upon surrender of their ADRs.
• JBS S.A. shareholders wishing to hold Class A Shares directly must take steps to cancel their BDRs and open an account with a qualified broker in the United States.
• The Cash Dividend of R$1.00 per share will be paid on a date to be announced by JBS S.A.'s management.
• JBS N.V.'s Board of Directors will decide on Class A to Class B share conversion requests quarterly during the Class A Conversion Period (until December 31, 2026).
• JBS N.V. will disclose to the market the number of Class A Shares converted into Class B Shares after the end of each quarter.

Key Dates

Recommendation

Keywords

JBS, Dual Listing, NYSE, B3, Corporate Restructuring, SEC Filing, Shareholder Meeting, Merger of Shares, Brazilian Depositary Receipts, BDRs, Class A Shares, Class B Shares, Dividends, Appraisal Report, Corporate Governance, Capital Structure, Global Operations, Meat Industry, Food Processing