JBS Said to Cut Morgan Stanley From Deal for Aiding Tyson

JBS SA (JBSS3) removed Morgan Stanley as the lead underwriter of its planned bond sale after learning the bank helped Tyson Foods Inc. make a rival offer to buy Hillshire Brands Co., according to a person familiar with the matter.

JBS’s $5.6 billion bid for Hillshire on May 27 was trumped today by a $6.2 billion offer from Tyson that’s backed by bridge funding from Morgan Stanley, which is also acting as Tyson’s financial adviser. JBS announced today it was temporarily withdrawing its proposed $750 million bond sale and seeking a new leading coordinator, without saying why.

Officials at JBS, the world’s largest meat producer, were caught by surprise by Morgan Stanley (MS)’s actions, according to the person, who asked not to be identified because he isn’t authorized to speak publicly. The New York-based bank is the No.2 global mergers-and-acquisitions adviser this year, working on $394 billion of announced deals and trailing only Goldman Sachs Group Inc., Bloomberg data show.

JBS has spent $17 billion on acquisitions in the past decade to overtake Tyson in the meat industry. JBS’s Pilgrim’s Pride Corp. unit offered $45 a share for Hillshire, compared with Tyson’s $50 offer.

JBS investor relations directorJeremiah O’Callaghan and Mary Claire Delaney, a spokeswoman for Morgan Stanley, declined to comment.

League Tables

Morgan Stanley ranks eighth among underwriters of Latin American corporate and sovereign dollar bonds this year, down from sixth in 2013, according to data compiled by Bloomberg. Morgan Stanley helped manage Sao Paulo-based JBS’s $650 million sale of bonds in May 2011, according to data compiled by Bloomberg.

Following today’s bid from Tyson, Pilgrim’s is reviewing its options, according to a person familiar with the matter. It’s too early to say whether the company will raise its offer, said the person, who asked not to be identified because the deliberations are private.

JBS’s $1 billion of dollar bonds due in 2020 climbed 0.27 cent to 107.49 cents on the dollar at 2:56 p.m. in New York in their biggest advance since May 15.

The acquisition of Hillshire, potentially the meatpacker’s largest takeover since 2009, would boost JBS’s debt levels to the highest in four years.

To contact the reporters on this story: Boris Korby in New York at bkorby1@bloomberg.net; Lucia Kassai in Houston at lkassai@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net; Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Dennis Fitzgerald

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