Brazilian meat producer JBS to spin off Vigor dairy unit

Brazilian meat producer JBS plans to spin off its dairy unit Vigor Alimentos and list its shares in São Paulo, as part of its strategy to compete with international dairy majors such as Danone and Nestlé.

The company’s board has given approval to the sale of Vigor’s 149.7 million shares for a total value of BRL1.19bn ($652m), with each share priced at BRL7.96 ($4.35) based on an average share price over the last few trading days.

JBS said that it would allow its shareholders to swap shares on a one-for-one basis with shares of Vigor.

In March, Vigor CEO Gilberto Xando told Reuters that the company planned to triple its dairy business in the country’s cash-rich midwestern, southeastern and southern regions over the next decade, and plans to raise funds through additional loans and sale of shares.

The company expects demand for yogurt, cheese, margarine and other dairy products to grow with the rise in middle class in the country.

Brazil is considered to be Latin America’s largest and rapidly growing economy, which has seen 35 million people living below poverty line join the middle class in the last decade.

Vigor is a manufacturer of the Faixa Azul Parmesan-branded cheese and is considered to be the fourth largest player in the country’s dairy market, holding a share of almost 7%.

JBS, based in São Paulo, produces fresh, chilled and processed beef, chicken and pork, and also sells by-products from the processing of these meats.