RIO DE JANEIRO, Feb 28 (Reuters) - Brazilian tax authorities allege that the 2009 merger of JBS SA and the Bertin Group, which created the world’s largest meatpacker, involved fraud that harmed minority shareholders, the Estado de S. Paulo newspaper reported on Sunday.
The allegations stem from a tax investigation of companies in the Bertin Group and have already resulted in an assessment of 3 billion reais ($751 million) in unpaid taxes and fines, the paper, one of Brazil’s largest, said.
While the main goal of the investigation was to collect taxes, authorities also allege the transaction between JBS and the Bertin Group involved the sale of undervalued assets and was structured in a way to make the takeover of Bertin’s meatpacking unit assets by JBS look like a merger of equals, the paper reported.
JBS arranged for the merger with the financially troubled Bertin Group by issuing 12 billion reais of new JBS stock, the paper reported.
Minority shareholders were hurt in part, according to tax authorities, because JBS valued the shares given to Bertin at the market value of 8.8 billion reais but J&F Investimentos, the holding company that controls JBS, only valued them at 4.9 billion reais, Estado said, citing tax authorities.
Bertin also gave up control of the bulk of the shares it said it was placing in J&F to complete the merger to a company that is still part of the controlling group, the paper said. Control of the shares was sold for a fraction of their market value five days before the deal was completed, Estado added.
Bertin sold its remaining stake in JBS in 2014 to Brazil’s Batista family, which founded and controls JBS.
The Bertin Group and JBS did not respond to requests from Reuters for comment.
J&F’s press office said in response to questions from Reuters that the JBS-Bertin deal did not involve fraud, was a share-based, non-cash transaction and was conducted with full transparency and the supervision of well-known and competent legal and financial advisers.
$1 = 3.9925 Brazilian reais Reporting by Jeb Blount; Editing by Alan Crosby