JPMorgan Joins Morgan Stanley in Losing JBS BusinessBoris Korby, Cristiane Lucchesi and Gerson Freitas Jr.
The bidding war for Hillshire Brands Co. is proving costly for the Brazilian bankers at JPMorgan Chase & Co. and Morgan Stanley.
After firing Morgan Stanley from a bond sale, Sao Paulo-based JBS SA pulled JPMorgan from a stock offering because the two banks are helping Tyson Foods Inc. counter its bid for Hillshire, two people familiar with the situation said, asking not to be identified as the matter is private.
The two investment banks are advising Springdale, Arkansas-based Tyson in a $6.2 billion offer for the maker of Jimmy Dean sausages that trumped a $5.6 billion proposal from JBS, the world’s largest meat producer. The Brazilian company’s firing of JPMorgan follows at least a dozen bond sales that the bank helped manage for JBS since 2006 and a $6.3 billion takeover of Bertin SA in 2009 where it acted as one of JBS’s advisers.
Tyson, the world’s No.2 meat producer, announced its bid and said it hired the two New York-based banks two days after JBS’s May 27 offer, saying JPMorgan is also likely to join Morgan Stanley in providing bridge financing for the deal.
Jeremiah O’Callaghan, investor relations director for JBS, declined to comment, as did Mary Claire Delaney, a spokeswoman for Morgan Stanley, and Veronica Navarro Espinosa, a spokeswoman for JPMorgan.
Morgan Stanley is the No. 2 global deals adviser this year, handling $394 billion of announced mergers and acquisitions and trailing only Goldman Sachs Group Inc., according to data compiled by Bloomberg. JPMorgan is fifth.
JPMorgan ranks second among underwriters of Latin American dollar- and euro-denominated bonds in 2014, while Morgan Stanley is 10th, the data show.
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 ($2.6 billion) in June 2013. JBS hired units of JPMorgan and Banco Bradesco for a 3 billion-real 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.
Wells Fargo & Co. was helping manage JBS’s planned $750 million bond sale, which the meatpacker has temporarily withdrawn as it seeks a new leading coordinator, according to a May 29 statement.
Shares of JBS rose 0.8 percent today to 7.56 reais as of 11:22 a.m. in Sao Paulo.
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.
The acquisition of Hillshire, potentially JBS’s largest takeover since the acquisition of Bertin in 2009, would boost the company’s debt levels to at least the highest in four years.