JBS Friboi's IPO triggers a surge in the company's shares.
After BNDES vetoed its corporate reorganization at the end of October, JBS shares are once again causing euphoria on the stock exchange due to the revision of the company's reorganization plan, with the IPO of its subsidiary JBS Foods International (JBSFI) in New York; analysts estimate that the company's shares could rise between 12% and 50%, from the most conservative to the most aggressive perspective, respectively.
Infomoney - After the BNDES (Brazilian Development Bank) vetoed its corporate reorganization at the end of October, JBS (JBSS3) shares once again have reason to celebrate on the Stock Exchange. At 13:05 PM (Brasilia time), JBS shares were up 16,92%, at R$ 10,85, after reaching a daily high of 17,35%, at R$ 10,89.
The market's perception is unanimous: the news of the revision to the company's reorganization plan, with the IPO (initial public offering of shares) of its subsidiary JBS Foods International (JBSFI) in New York, is positive for the company.
From the analyses compiled by InfoMoney, BTG Pactual presents the most aggressive projection for the stock, seeing a possibility of a further 50% increase from the current level, reaching R$ 16,60. The bank, however, reiterated its neutral recommendation for the stock, but with a positive bias if they manage to proceed with the offering. Credit Suisse, in its conservative analysis, sees a chance of the stock rising another 12%, reaching close to R$ 12,20.
Itaú BBA, in turn, today opted to raise its recommendation for the stock from market perform (performance in line with the average) to outperform (performance above the average). "The IPO aligns value creation between controlling shareholders and minority shareholders and helps reduce leverage," commented the bank's analysts.
A less controversial proposal
According to BTG, this new proposal is less controversial than the previous one and should be well received by the market. The main difference from the original proposal is that JBS Foods International (JBSFI) will now remain a subsidiary controlled by JBS (and not the other way around as previously proposed). The subsidiary will concentrate all international operations of JBS and Seara, while maintaining the group's headquarters in Brazil.
"The IPO could be a way to unlock value and a potential catalyst for re-rating the company's shares," commented the bank's analysts. Furthermore, they pointed out that the IPO could also provide more liquidity to the balance sheet – a point they are particularly concerned about.
Will BNDES not interfere again?
In a teleconference held this morning, the group's president, Wesley Batista, said that the plan can be implemented with the board's approval, regardless of BNDES approval, and reinforced that this will accelerate the reduction of the company's leverage. He also commented that he believes BNDES viewed the new plan favorably, but explained that it is still premature to estimate the size and value of the IPO.
JBS's new plan comes after BNDESPar, the Brazilian Development Bank's arm, vetoed a reorganization in October that would have relocated the group's headquarters to the Netherlands. Due to the cancellation, JBS shares plummeted 23% on the stock exchange in the eight trading days following the announcement, reaching R$ 9,11 on November 4th, the lowest level since June 2016. It's worth mentioning that, despite the strong rise today, JBS shares have not yet recovered the level lost on the day of BNDES's "no," October 25th, when they were trading around R$ 12,00.