In a release to the stock exchange this week, JBS put the wheels in motion on a corporate restructure that will see international headquarters located in Ireland. While some have said this is a tax play, we review the JBS business model to better understand how a family-run business has become the largest meat processor in the world.

Even though it is still early days, have the Brazilians their eyes set on a strategic acquisition of one of the Irish-owned beef processors?

The decision to move their headquarters to Dublin, was made all the easier considering JBS already has a presence on these shores.

Last year it paid €1.3bn to acquire Northern Ireland-based poultry processor Moy Park from its Brazilian competitor Marfrig.

Listen to a discussion of JBS's move in our podcast below:

The company has also announced plans to list on the New York Stock Exchange (NYSE).

This will provide access to US capital markets, including better interest rates. JBS current borrowing costs are twice that of rival Tyson Foods.

One of the biggest challenges to JBS down through the years has been its level of debt and its ability to service it.

Today, while the Brazilian Government bank (BNDES) owns about 24% of the business, it has debt of €13bn, which is on the high side, at 3.2 times earnings.

But a further challenge is that the majority of its debt is in dollars and the company reports in Brazilian reals, a currency that has devalued significantly in the last two years.

The business model

Although JBS was founded in 1953 as a family business, it has really only taken off as a multinational meat processor under the leadership of the second generation, and in particular CEO Wesley Batista.

In 2007, more or less out of nowhere, it paid $1.5bn to acquire Swift, a major US beef processor. Two years later it spent $800m for a 63% stake in America’s largest poultry producer, Pilgrim’s Pride. Over the following seven years JBS spent about $25bn on acquisitions.

Today, almost 90% of JBS’s business and earnings comes from outside Brazil. It slaughters 21m cattle, 3.6bn chickens and 28m pigs in its facilities around the world every year. It has an annual turnover of €46bn, employs over 230,000 people and has 200 production facilities worldwide.

This dwarfs the total Irish beef industry, which typically slaughters just over 1.75m head per annum, has an approximate turnover of €3bn, with 26 main abattoirs.

Why Ireland?

The question must be asked what JBS really sees in Ireland, as it could have located its international headquarters in the US. Does it view Ireland as a country with a low corporate tax rate – or rather does it see a country with access to the EU single market?

From a tax point of view, the process may be much simpler if JBS had operations located here. Other global players such as Apple and Google have a significant operational presence here that gives some credibility as to why they would use Ireland as their HQ, other than just the favourable tax rate.

Aside from having an operational facility for the optics, Ireland – being the largest net beef exporter in the northern hemisphere – would be a natural strategic fit for a huge multinational meat processor to get established in the EU.

As history shows, JBS enters markets by acquisition. Is this what it intends to do to gain access to the most lucrative beef market in the world?

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Editorial: Are the Brazilians coming to Ireland just to reduce tax?