JBS SA, the world’s biggest meat producer, removed JPMorgan Chase & Co. from the group of investment banks underwriting its food unit’s planned initial public offering, two people familiar with the matter said.
The Sao Paulo-based company’s decision was triggered by an announcement by Tyson Foods Inc. that the bank is advising it in a rival offer to buy Hillshire Brands Co., the people said, asking not to be identified because the matter is private. The firing came a day after JBS removed Morgan Stanley as lead underwriter of a planned bond sale for the same reason.
JBS’s $5.6 billion bid for Hillshire on May 27 was trumped May 29 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. JPMorgan is likely to join Morgan Stanley in providing funding for the transaction, Tyson said.
Jeremiah O’Callaghan, investor relations director for JBS, and Veronica Navarro Espinosa, a spokeswoman for JPMorgan, declined to comment.
JBS is seeking regulatory approval to sell shares of its JBS Foods SA unit in what would be Brazil’s first initial public offering this year. Voting shares of the unit holding JBS’s Brazilian pork, poultry and food-processing operations will be listed in Brazil’s Novo Mercado subject to regulatory approval and market conditions, it said in a May 20 filing.
The unit was formed after JBS agreed to buy Seara food-processing assets from Marfrig Global Foods SA for 5.85 billion reais in June 2013. JBS hired units of JPMorgan and Banco Bradesco for a 3 billion-real ($1.3 billion) IPO of the unit, two people with direct knowledge of the matter said in April. JBS also hired Banco Itau BBA SA, Banco Santander SA, Grupo BTG Pactual and Banco do Brasil SA to underwrite the share offering.
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.
Following Tyson’s May 29 bid, 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.