By Rogerio Jelmayer and Luciana Magalhaes
SÃO PAULO--Brazil's JBS SA is planning to sell shares in its new
processed foods and poultry division, raising some 3 billion
Brazilian reais ($1.36 billion) that would be used to pay down debt
and make investments, according to three people familiar with the
deal.
JBS, the world's biggest meatpacker in terms of revenue, has
hired five investment banks-- Bradesco BBI, Itaú BBA, Banco
Santander, BTG Pactual and J.P. Morgan--to manage the deal,
according two of the people. More banks may be added to the group,
they said.
A JBS spokesman declined to comment. The news was first
published on the website of local news magazine Exame.
Timing will depend on market conditions, one of the people said.
Another said the deal could be done this year.
JBS faces a challenging scenario in the equity market, despite
some signs of improvement in recent weeks. Brazilian companies have
been struck by a double-whammy in global capital markets: the
reduction of monetary stimulus by the U.S. Federal Reserve, which
has led investors to pull money out of emerging markets, and
concerns about the state of the economy in China, Brazil's largest
trade partner.
The outlook has improved in recent weeks amid signals that the
Fed's stimulus tapering will be a slow process, and that plenty of
money is still being pumped into global markets. Still, so far this
year, no company has tapped the equity market in Brazil.
JBS Foods was created at the end of last year to oversee assets
such as Seara Brasil, bought from Marfrig Alimentos SA for 5.85
billion reais at the end of 2013. The unit is a major player in the
poultry market in Brazil, where it competes with BRF SA, the
largest producer and exporter of poultry.
The unit's annual revenues are expected to reach around 12
billion reais, according to one of the people, more than a tenth of
JBS's net revenue of 93 billion reais in 2013.
JBS said the firm will release JBS Foods' results separately in
its first quarter results. According to one of the people familiar
with the deal, that will help give investors a better idea of the
size and scope of the company.
JBS had net debt of 23.75 billion reais at the end of 2013, up
from 22.4 billion reais at the end of the third quarter.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and
Luciana Magalhaes at luciana.magalhaes@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires