Brazil’s JBS (NYSE: JBS) listing in US may be just what the doctor ordered
JBS (NYSE: JBS)—a Brazilian food conglomerate and the largest meatpacker in the world—just finished listing on the New York Stock Exchange, opening up its shares to a much larger pool of American investors. The move could help repair a battered image as the company seeks to emerge from a scandal-ridden past that’s involved allegations of bribery and violations of the Foreign Corrupt Practices Act.
“Joining the NYSE is a source of great pride for all of us at JBS,” CEO Gilberto Tomazoni said. “This step strengthens our access to global capital markets and enhances our ability to deliver long-term value to shareholders.” CFO Guilherme Cavalcanti added that the new chapter would entail “robust financial management.”
No new capital was raised amid the transition, and shares will continue to trade in São Paulo on the B3 exchange through Brazilian Depositary Receipts.
Founded 72 years ago by José Batista Sobrinho, JBS distributes products to over 180 markets and employs around 280,000 people. In the US, the company produces beef and pork, while also controlling big retail brands like Pilgrim’s Pride and Wild Fork Foods. It had a banner 2024, growing across all business units with adjusted Ebitda rising 108% from the previous year to $7.2 billion. Prior to the switch to New York, shares denominated in reais had gained nearly 80% over the past 12 months in Sao Paulo trading.
But the momentum is clouded by shadows stemming back to 2017 when Batista family-controlled J&F Investimentos—which owns around half of JBS stock—admitted to paying bribes to Brazilian officials to help secure government funding. The investment holding company later agreed to pay $256 million to the US Department of Justice to resolve a criminal investigation, while JBS has also faced intense criticism about its environmental practices.
Increased risk, or the remedy?
A group of US lawmakers last year cited the troubled history in a letter to the Securities and Exchange Commission, urging the regulator to carefully scrutinize the plans for the New York listing. “Over twelve years, JBS engaged in an extensive, international bribery corruption scheme as well as illicit activity in the United States,” a bipartisan group of senators including Cory Booker and Marco Rubio (now Secretary of State) wrote, referencing a track record of alleged human rights abuses and the monopolization of the meatpacking market.
The Wall Street Journal reported that big banks including Morgan Stanley (NYSE: MS), JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) won’t work with JBS because of compliance worries.
Still, despite all the concern, it’s precisely a US stock exchange that may be the remedy. While many presume that the boosted valuations that can result from a high-profile float on the NYSE are connected to the expanding pool of potential investors, the National Bureau of Economic Research published findings more than 20 years ago that showed there’s another factor at play: US listings decrease the ability of controlling shareholders to extract private benefit.
“Firms that have controlling shareholders who extract high benefits from control will not list in the US because doing so threatens their ability to extract these benefits,” authors Craig Doidge, G. Andrew Karolyi and René M. Stulz wrote in a 2001 paper. “Consequently, the firms that will choose to list in the US are those where controlling shareholders extract fewer benefits from control compared to firms from the same country that do not list in the US.”
Listing shares in the US, in other words, forces companies to submit to much stricter rules, and that transparency—especially when controlling shareholders have incentives that clash with those of minority investors—seems to boost valuations over time. In the case of JBS, that’s just what the doctor ordered. Rather than helping insiders further enrich themselves, the NYSE may give the company the restraint its largest Batista shareholders have in the past been unable to muster on their own.
