October 16, 2017 / 11:57 AM / 5 months ago

Brazil's JBS withdraws plan for U.S. processed food unit IPO

BRASILIA/SAO PAULO, Oct 16 (Reuters) - JBS SA has pulled a planned $500 million initial public offering of processed food subsidiary JBS Foods International BV, almost six months after a spree of corruption and food safety scandals hurt investor demand for the deal.

In a U.S. Securities and Exchange Commission filing dated Friday, JBS Foods International requested a withdrawal of the IPO because it “decided not to pursue the sale of securities pursuant to the registration statement at this time.”

Neither parent JBS nor the unit elaborated further or gave a new timetable for the transaction.

Both companies first announced plans for a U.S. offering on Dec. 5. São Paulo-based parent JBS, the world’s No. 1 meatpacker, reaffirmed plans to list the subsidiary in August, saying a transaction could take place by the end of next year.

The proposal for the JBS Foods International IPO was first tested in March, after a scandal over an alleged bribery of health officials triggered bans on Brazilian meat exports. Two months later, two members of the family that controls JBS agreed to a plea bargain deal in Brazil relating to a corruption probe.

The family members, brothers Wesley and Joesley Batista, were arrested last month in connection with insider trading and other offenses related to their plea deal. Wesley, JBS’s former chief executive officer, had to step down as a result of his arrest.

The cancellation of the offering deals a blow to the Batista family, which was involved in a recent deal to refinance 21 billion reais ($6.7 billion) worth of JBS debt and the sale of several assets.

Reuters reported in March and in May, shortly after the food safety and corruption scandals, respectively, that JBS would press ahead with the $1 billion IPO plan despite dwindling investor confidence.

$1 = 3.1562 reais Reporting by Jake Spring and Guillermo Parra-Bernal; Editing by Bernadette Baum

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