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JBS shares surge on plan for New York listing

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JBS SA shares surged, as it announced plans to float its international meat business in New York, just weeks after abandoning a shake-up that would have seen its headquarters move to Ireland.

JBS Foods International will take control of all the company's businesses except for the Brazilian beef industry, which will remain under the direct control of parent company JBS SA.

The Brazilian meat processing giant expects to complete the initial public offering during the first six months of 2017.

Second go and restructuring

In October, JBS scrapped a planned shakeup that would have put all its businesses, including the Brazilian beef segment, under the control of a New York-listed parent company.

The shake-up, which would have moved the headquarters of the whole business to Ireland, was opposed by BNDES ParticipaƧƵes SA, the investment arm of Brazil's development bank, which is a major shareholder.

Shares in the company plunged when the deal was scrapped, but rallied on the news that a restructure was planned.

Debts to be shifted

Under the new scheme, the international business will remain headquartered in the Netherlands, while JBS SA will be headquartered in Brazil.

All of JBS SA's debts will be moved to the international business.

One motive of the previous restructure was that a New York listed business will be more able to access refinancing, which is important for the heavily indebted company.

Wesley Batista, chief executive of JBS SA, will be the chairman of JBS Foods International.

The role of chief executive of the international business will be taken by JBS executive Gilberto Tomazoni.

Shares rally

Broker Itau upgraded its rating for JBS to outperform, saying that compared to the previous restructuring the new plan was "a less complicated initial public offering with no changes in the holding company".

Itau noted the deal has already been approved by BNDES, which blocked the last attempt.

"BNDES' approval was, in our view, based on the fact that JBS's holding company and headquarters will remain in Brazil," Itau said.

In particular, shareholders in JBS SA will be allowed to hold onto their original shares, rather than being forced to migrate their holdings over to the international business.

But the success of the offering will be dependent on demand for the New York shares, Itua noted.

JBS shares were up 12.8% in morning deals, at R$10.47.

By William Clarke

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