JBS SA named founder Jose Batista Sobrinho, 84, as chief executive officer, keeping the Batista family in control of the world’s largest meat producer while his two sons who ran the company for the past decade remain in jail.
Batista Sobrinho was unanimously chosen to succeed his son Wesley Batista, the company said in a regulatory filing Sunday. Aguinaldo Ramos Filho, another member of the family, will take Wesley’s place on the company’s board.
The patriarch will serve until the end Wesley’s term in May 2019 and will be advised by a managing committee formed by Gilberto Tomazoni, JBS’s global head of operations; Andre Nogueira, the CEO of JBS USA; and Wesley Batista Filho, Wesley’s son and the head of JBS USA’s beef division. The Sao Paulo-based company is looking for a new chief financial officer, Chairman Tarek Farahat said in the filing.
Wesley, who had run JBS since 2011, was arrested last week as part of an investigation into allegations of insider trading, the latest setback in a tumultuous year for the company. His detention came just days after Joesley Batista, the youngest of the Batista sons, was jailed amid a separate probe into a plea deal he signed with Brazilian prosecutors earlier this year.
JBS shares fell as much as 4.9% in Sao Paulo on Monday, a sign that some investors expected to see a non-family member as the new CEO. The stock jumped last week amid speculation that the company was about to make changes to its management.
"It would be better not to have any family member re-assuming command, but I understand that the family will try to keep control of the company until the last minute or until there are no more options," said Soummo Mukherjee, a strategist at Mizuho Securities USA LLC in New York.
While Batista Sobrinho’s appointment should appease lenders who called for stability at JBS, it’s not clear if it will be enough to end a dispute between the Batistas and Brazilian development bank BNDES, according to Ian McCall, who manages $180 million in emerging-market assets at First Geneva Capital Partners. BNDES, JBS’s second-largest shareholder, had tried to force Wesley Batista out of his role as president prior to his arrest. BNDES President Paulo Rabello de Castro is looking for ways to block the appointment of Batista Sobrinho, Brazilian newspaper O Globo reported Monday. BNDES didn’t immediately respond to requests for comment.
Ze Mineiro, as Batista Sobrinho is known in Brazil, founded the company that bears his initials after settling in Brasilia in 1957 and working as a butcher, just as President Juscelino Kubitschek was fast-tracking his plan to turn the city into the nation’s new capital. Batista helped supply meat for construction workers and later acquired his first factory, the first in a series of acquisitions that transformed his business into the world’s largest meatpacker over the next decades.
The meat giant had accelerated discussions on a succession plan after Wesley’s detention. The businessman’s lawyers are appealing to a higher court after a judge denied the request to free him and his brother from preventive arrest, which in Brazil has no set time frame for release.
Potential candidates for the top job had included Nogueira, Tomazoni and Farahat, people with direct knowledge of the matter said last week. Brazilian media also speculated that Jose Batista Jr., the older brother of Wesley and Joesley, and Wesley Batista Filho were contenders for the post.
--With assistance from Tatiana Freitas.
To contact the reporter on this story: Gerson Freitas Jr. in São Paulo at [email protected]
Jim Efstathiou Jr.
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