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Environmentalists criticize approval over deforestation,

emissions claims

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Groups highlight JBS's history of legal issues

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Wall St sees boost to world's top meatpacker stock price

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Global Witness warns of limited ESG influence for minority

shareholders

By Ana Mano

SAO PAULO, May 2 (Reuters) - The U.S. financial

regulator's approval last month of a proposal by the world's

largest meatpacker JBS to list on the New York Stock

Exchange is drawing strong criticism from climate and animal

rights groups but praise from Wall Street.

In multiple statements after April 22, when Brazil's JBS

said the U.S. Securities and Exchange Commission (SEC) greenlit

its dual-listing plan to broaden its investor pool and raise its

valuation closer to peers, environment activists and animal

rights lobbies have unleashed a campaign condemning it.

They cited sprawling criminal investigations into JBS or its

controllers in Brazil and in the U.S., as well as concerns over

the deforestation of the Amazon and the company's outsized role

as a large global emitter of greenhouse gases in the course of

its operations.

"Given the company's long rap sheet of illegal and corrupt

conduct, it's hard to see how the SEC could have confidence that

JBS won't deceive U.S. investors," Glenn Hurowitz, CEO of Mighty

Earth, a Washington D.C.-based advocacy group, said in a

statement.

JBS was deeply implicated in a bribery scandal in 2017 that

shook Brazil's political and economic landscape. In the U.S.,

the company or related parties were fined millions of dollars in

2020 for corruption in Brazil and for bribery related to its

2009 acquisition of Pilgrim's Pride, another top U.S.

meat company.

U.S. lawmakers have also raised concerns over the listing

and JBS's criminal and environmental track record.

The SEC did not respond to several requests for comment.

JBS said it believes its U.S. listing presents a compelling

investment option and increased opportunities for farmers and

ranchers, employees, consumers and the communities where it

operates.

The company, which partly funded its aggressive global

expansion by issuing bonds traded internationally, pointed out

that it has been subject to the information and reporting

requirements of the U.S. Securities Exchange Act of 1934 and

other U.S. federal securities laws for years.

Global Witness, a London-based organization which

investigates industries' links to climate change, called SEC's

approval of the listing "a disaster" for both the planet and its

people. Other groups have alleged that JBS purchases cattle

grazed on deforested areas of the Amazon.

In a statement to Reuters, JBS rejected that claim, citing a

"rigorous, zero-tolerance agricultural commodity sourcing policy

with strong anti-deforestation measures."

But climate activists are unimpressed.

"Allowing it to list on the world's largest stock exchange

-unlocking vast opportunities for expansion and profit- shows

the deep failures of the U.S. financial regulatory system,"

Global Witness said.

SUPER VOTING SHARES

This year, JBS stock rose some 24% on the Sao Paulo Stock

Exchange on expectations that the SEC would approve the U.S.

listing, something the company has been seeking in various forms

since 2009. The company announced the structure of the current

listing proposal in July 2023.

For Brazilian investment bank BTG, access to a larger pool

of investors after listing in the U.S. would offer JBS

"unprecedented firepower to drive growth."

Citi and other banks have repeatedly said the move will

close a valuation gap with rivals, like Tyson Foods ( TSN ).

Under the plan, the meatpacker's shares will be primarily

listed in New York through a Netherlands-based company, but the

stock will also continue to trade in Sao Paulo via Brazilian

Depositary Receipts (BDRs), which are certificates representing

shares of foreign companies traded in Brazil.

JBS NV, the Dutch company created for the dual listing, will

issue Class A and Class B shares. The Class B shares will have

10 times the voting power of Class A shares, and only Class A

shares will be publicly traded.

All shareholders will be able to convert Class A into Class

B shares through December 2026. That will define JBS' final free

float on the NYSE and voting power distribution.

On May 23, an extraordinary assembly of JBS shareholders

will vote on the dual listing plan. JBS' second largest

shareholder, the equity arm of Brazil's development bank,

BNDESPar, said it would abstain from voting.

JBS shares could start trading on the NYSE as soon as

June.

After all steps are complete, the controlling

shareholders could end up with 85% of voting power in one

potential scenario, said Genial Investimentos, a Sao Paulo-based

investment firm.

Global Witness said such power concentration would limit

opportunities for minority shareholders to steer the company on

environmental, social and governance (ESG) issues.