Crisis Erodes JBS Value and Threatens Expansion Plan

05/24/2017 - 11h46

The crisis triggered by the plea bargain deals of JBS's controllers eroded the company's value and created new risks for the ambitious international expansion plan it has been trying to get out of the paper for months.

Targeted by several police actions since last year, the company lost 46% of its market value on the stock exchange since January - a loss equivalent to R$ 15 billion (US$ 4.6 billion). JBS´s shares rose 9.53% on Tuesday (23), recovering part of the losses suffered on Monday (22), when the shares dropped 31.34%.

However, the day's rise do not indicate a better outlook, in the opinion of the few analysts who risk mapping scenarios for JBS. Aldo Moniz, chief analyst at Um Investimentos, says that new risk factors for the company have emerged.

J&F, a company of the Batista family that controls JBS, is negotiating with the Federal Prosecutor's Office a leniency agreement to keep its access to public credit and will have to pay a billion-dollar fine. Prosecutors asked for R$ 11 billion (US$ 3.3 billion), but the company did not accept it.

	Danilo Verpa/Folhapress
	Joesley Batista, owner of the JBS group

The company also became the target of investigations in the United States, and American investors began to mobilize to sue JBS in court for losses suffered with their shares. The mistrust of investors and stock devaluation have led the company to postpone its plan to launch shares on the New York Stock Exchange as an essential step for the meat giant to take a fresh leap in its international expansion.

There is a crisis of credibility, according to José Vicente Ferraz, director of Informa Economics FNP. "It can contaminate the [company´s] image internationally. Those who do not trust do not do business, "he says.

Translated by MARINA DELLA VALLE

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