JBS eyes chicken business acquisitions as it expands in Southeast Asia

ASIA – Brazilian meatpacker JBS is evaluating acquisitions in Southeast Asia’s chicken industry as it looks to expand its presence in the region, Reuters reported, citing Chief Executive Officer Gilberto Tomazoni.

Tomazoni said during a call with analysts that the company is examining opportunities in the sector, although JBS has yet to find acquisition conditions it considers suitable.

The company’s interest in Southeast Asia comes days after JBS reached an agreement with PT Danantara Indonesia (DIM), an investment arm of Indonesia’s sovereign wealth fund, to establish a joint venture focused on protein production.

Under the agreement, the venture will pursue investments across Indonesia, other Southeast Asian markets, Australia and New Zealand, according to a JBS securities filing.

DIM will provide US$2.5 billion to the partnership, with US$800 million to be paid upon closing and the remaining funds deployed over up to three years.

JBS, meanwhile, will transfer its existing businesses in Australia and New Zealand into the new entity as part of the transaction.

Once the partners have committed the full US$2.5 billion, the joint venture will be able to raise up to a further US$2.5 billion in debt to finance additional investments.

Indonesia to receive initial focus

For the first two years after the deal is completed, capital supplied by DIM will be allocated exclusively to investments in Indonesia’s protein production industry.

JBS and DIM have also agreed to a five-year lock-up period that will prevent either party from freely disposing of its stake in the venture during that period.

The companies intend to eventually seek an initial public offering for the joint venture, which could create a separately listed company for their protein-sector investments.

The transaction still requires regulatory approvals and must satisfy other conditions before it can close.

JPMorgan said the structure could give JBS room to continue investing and pursuing acquisitions while reducing the cash it must put into expansion at a time when its balance sheet is under greater pressure.

JBS’s latest comments suggest chicken is among the areas the company is considering as it evaluates further growth opportunities across Southeast Asia, although Tomazoni indicated that no acquisition has yet been agreed.

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