JBS TO RAISE $1.04BN AFTER DELAYING US UNIT'S IPO
JBS SA, the world's biggest beef producer, is raising $1.04bn through the sale of new voting shares three months after delaying the listing of its United States based unit.
Bloomberg reported on Wednesday that JBS was selling 230 million shares, including a possible supplementary offering, for eight reais each, according to a regulatory filing late on Tuesday. That's 1.7 per cent below the 8.14 reais close in Sao Paulo on Tuesday. JBS said earlier this month it would sell as many as 270 million voting shares.
JBS would join 12 other companies that have priced their share sales in Brazil so far this year, compared with two for the same period a year earlier, data compiled by Bloomberg showed. State-controlled oil company Petroleo Brasileiro SA was also planning to raise $25bn by selling shares.
'Not only is Petrobras's huge sale hurting demand somewhat, but you also a very small amount of foreign investors coming to emerging markets because of concern about the global recovery,' said Fabio Cardoso, a partner at Adinvest Consultoria, a Rio de Janeiro-based fund management firm.
'Whenever you have big offers like this without much foreign money coming in that tends to pull down the stock.'
Stocks worldwide tumbled on Wednesday after credit rating downgrades of Greece and Portugal fueled concern debt-laden nations were moving closer to default. Foreign investors, who bought 64 per cent of shares, sold in Brazil this year, have withdrawn a net 187 million reais from the nation's stock market, according to exchange operator BM&FBovespa SA's data.
'A lot of international investors are suffering from deal fatigue right now,' an analyst at Van Eck Associates in New York, Ed Kuczma, which manages $21bn, said by phone. 'There are a lot of offers being placed in the next 6 to 12 months' in Brazil. JBS postponed the $2 bn initial public offering of its JBS USA Holdings Incorporation unit in January, saying market conditions 'deteriorated.' JBS's shares have fallen 13 per cent this year, compared with a three per cent loss for Brazil's benchmark Bovespa index. Five of the seven IPOs in Brazil this year have priced shares below the estimated range, including Julio Simoes Logistica SA, which sold its stock for 8 reais each after cutting the price estimate to a range of 8.50 to 9.50 reais from as much as 13.75 reais.
JBS's share sale will help raise funds to expand its global distribution after several acquisitions, according to the prospectus. The meatpacker controls more than 10 per cent of global beef processing after about 30 acquisitions in the past 15 years, including Smithfield Foods Incorporated beef business in early 2008.
The company, which resumed purchases late last year after the global credit crunch reduced the value of assets, has acquired Pilgrim's Pride Corp., Brazil's Bertin SA and Australian lamb producer Tatiara Meat Company.