The global grains merchant cut its 2023 profit forecast and said its fourth-quarter results would be delayed due to the investigation related to certain inter-segment transactions flagged by the U.S. Securities and Exchange Commission (SEC).

The SEC did not respond immediately to a Reuters request for comment.

ADM’s stock was last down at $55.86, its lowest level since March 2021.

The probe brings uncertainty to ADM’s high-margin Nutrition segment, which is already grappling with weak demand for meat alternatives.

The segment supplies a range of ingredients including plant-based proteins, natural flavors, emulsifiers to food, beverage and nutritional supplements industries, among others.

At least four brokerages downgraded ADM’s stock after the SEC request, and the company cut its adjusted earnings forecast to $6.90 per share for the fiscal year ended December, 2023 from an “excess of $7 a share” earlier.

“First and foremost, understanding the true scope of potential accounting irregularities and their impact on Nutrition segment revenues/margins will be critical,” said Goldman Sachs analyst Adam Samuelson.

“If (the) issue is just transfer pricing (tax avoidance), it shouldn’t change 2024 EPS outlook. ADM likely can continue buybacks and close recent acquisitions despite investigation,” said analysts at BMO.

ADM has been diversifying into the flavors and nutrition food business through takeovers. It first acquired WILD Flavors in 2014 for $3 billion and most recently, towards the end of 2023, said it would buy UK-based flavor and ingredient firm FDL.

Until investors have more clarity as to what exactly went wrong with ADM’s nutrition segment accounting, UBS analysts said traders could turn to shares of Darling Ingredients DAR.N and Bunge Global BG.N.

ADM appointed Ismael Roig on Monday as its interim CFO.

–Reporting for Reuters by Medha Singh and Seher Dareen in Bengaluru.

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The guilty plea makes Pilgrim’s Pride, mostly owned by Brazilian meatpacker JBS, the first U.S. chicken company to reach an agreement with the government over allegations that industry executives conspired to increase chicken prices from 2012 through 2019.

Pilgrim’s Pride agreed to plead guilty to one count of conspiracy to limit competition in chicken product sales, according to a Securities and Exchange Commission (SEC) filing. A company statement said the agreement covered three chicken contracts with one U.S. customer.

As part of the deal, the department’s antitrust division will not bring more charges against Pilgrim’s Pride in the case, the statement said. Shares jumped 6.1 per cent to $16.63 on Wednesday afternoon (all figures US$).

“We are encouraged that today’s agreement concludes the antitrust division’s investigation into Pilgrim’s,” CEO Fabio Sandri said.

The antitrust division confirmed it reached a plea agreement with Pilgrim’s Pride and declined further comment until the deal is filed. It is subject to the approval of the U.S. District Court of Colorado.

The former CEO of Pilgrim’s Pride, Jayson Penn, was indicted in June, along with other current and former industry executives, on charges of seeking to fix chicken meat prices. Penn has pleaded not guilty.

Last week, the government broadened the probe by indicting more industry executives, including Bill Lovette, who preceded Penn as CEO of Pilgrim’s Pride.

Rival supplier Tyson Foods said in June it was co-operating with the department’s investigation under a corporate leniency program that could protect the company from criminal prosecution.

Separately, JBS said it will pay a $26.9 million fine after making a deal with the SEC over violations related to Pilgrim’s Pride’s books, and prosecutors said JBS parent J+F Investimentos will pay $256 million after pleading guilty to violating the U.S. Foreign Corruption Practices Act.

–– Reporting for Reuters by Rama Venkat in Bangalore, Tom Polansek in Chicago and Diane Bartz in Washington.

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In a Friday filing with the U.S. Securities and Exchange Commission, JBS Foods International requested a withdrawal of the IPO. While neither company gave a new timetable for the IPO, JBS said in a statement to Reuters that a U.S. listing of JBS Foods “is the best way possible to maximize shareholder value.”

Parent JBS and the processed food subsidiary first announced plans for a U.S. offering on Dec. 5. Sao Paulo-based JBS, the world’s No. 1 meatpacker, reaffirmed plans to list the subsidiary in August, saying a transaction could take place by the end of next year.

The proposal for the JBS Foods International IPO was first put to test in March, after a scandal over an alleged bribery of health officials triggered bans on Brazilian meat exports. Two months later, two members of the family that controls JBS agreed to a plea bargain deal in Brazil relating to a corruption probe.

A collapse of the plan is a setback for Brazil’s billionaire Batista family, which owns 42 per cent of JBS and saw the IPO as a way to improve JBS’s global standing. The transaction was seen as a way to help decouple JBS’s businesses from Brazil — where reputational issues have impaired share performance in recent months.

Reuters reported in March and in May, shortly after the food safety and corruption scandals, respectively, that JBS would press ahead with the US$1 billion IPO plan despite dwindling investor confidence.

Common shares fell 0.6 per cent to 8.60 reais (C$3.39) on Monday. The stock is down 25 per cent so far this year.

Brothers Wesley and Joesley Batista were arrested last month in connection with insider trading and other offenses related to their plea deal. Wesley, the elder of them and also JBS’s former chief executive, quit as a result.

Both brothers will face trial for carrying out stock and foreign exchange transactions based on knowledge of their plea deal, a federal court confirmed on Monday. Both have been charged last week on the same case.

Both Batistas worked personally on the refinancing of 21 billion reais (C$8.3 billion) in short-term debt of JBS and spearheaded the sale of several assets, including the company’s cattle feedlot at Brooks, Alta.

Among the international operations that would have been included in the JBS IPO is one of Canada’s biggest beef packing plants, also at Brooks, with capacity to process up to 4,200 head of cattle per day.

— Reporting for Reuters by Guillermo Parra-Bernal and Jake Spring.

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The chicken sector, which is dominated by a handful of large meat companies, has come under increased scrutiny over the past year as customers and farmers have alleged antitrust violations relating to pricing, production and compensation.

U.S. poultry buyers claimed in a lawsuit in 2016 that Tyson, the nation’s biggest chicken processor, and its competitors had colluded since 2008 to reduce output and manipulate prices.

Tyson, Pilgrim’s Pride and Sanderson Farms have denied the accusations.

Investors in separate lawsuits have alleged the processors made misleading statements or failed to disclose information about price fixing.

Tyson CEO Tom Hayes declined to share details about its subpoena on a conference call with reporters after the company reported better-than-expected quarterly sales and profit. He said the company had not changed pricing practices.

Tyson received the subpoena from the SEC on Jan. 20 in connection with an investigation related to the company, according to regulatory documents.

The seller of Ball Park hot dogs said it had limited information and was cooperating with the probe, which is in an early stage.

Pilgrim’s Pride said it had not received a subpoena from the SEC. Sanderson Farms declined to comment.

Tyson’s stock ended down 3.5 per cent at $63.13 (all figures US$). Shares of Pilgrim’s Pride, mostly owned by meat packer JBS SA, lost four per cent to $18.64. Sanderson Farms shares slid 1.9 per cent to $89.50.

Commenting on the subpoena, JPMorgan analyst Ken Goldman said “obviously it is not a positive” for Tyson.

Joe Agnese, analyst for CFRA Research, said the news will restrict Tyson’s valuation until investors’ concerns are alleviated.

The subpoena arrived as Hayes is finding his footing as Tyson’s new CEO after taking over for Donnie Smith on Dec. 31.

Tyson has sought to increase profit by selling more value-added items such as pre-seasoned products and heat-and-serve meals, which command higher margins than basic meats.

Net income attributable to the company rose to $1.59 per share in the quarter ended Dec. 31 from $1.15 a year earlier. Sales were $9.18 billion, up from $9.15 billion.

Analysts on average expected earnings of $1.26 and revenue of $9.05 billion, according to Thomson Reuters I/B/E/S.

Tyson raised its full-year profit forecast to $4.90 to $5.05 per share from $4.70 to $4.85.

— Reporting for Reuters by Tom Polanasek in Chicago and Sruthi Ramakrishnan in Bangalore.

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An indictment announced on Friday by federal prosecutors in Chicago charged Luis Martin-Caro Sanchez, 42, of Madrid, with one count of obstruction of justice and two counts of perjury.

The U.S. Department of Justice said Sanchez lied in a July 2011 Securities and Exchange Commission deposition when he denied knowing other people who bought PotashCorp securities before the Saskatoon fertilizer firm revealed Anglo-Australian mining company BHP Billiton’s unsolicited US$38.6 billion takeover bid.

Prosecutors said Sanchez in fact made several calls to two of those people in the days before the offer became public.

They also said he concealed information about a Swiss bank account he maintained, and to which a friend had wired 100,000 euros (C$143,694) of proceeds from selling Potash stock options.

Prosecutors said the SEC did not discover the account and the transfer until January 2014, long after a federal judge in December 2011 dismissed that regulator’s own civil insider trading case against Sanchez.

The Justice Department said it will seek Sanchez’s extradition. He faces up to 20 years in prison on the obstruction charge.

It is unclear whether Sanchez has a lawyer. A lawyer who defended him in the SEC case on Friday said he does not represent Sanchez in the criminal case.

The SEC had accused Sanchez of insider trading after he allegedly made US$496,953, equal to a 1,046 per cent return, in just five days by investing in PotashCorp call options, but the judge found insufficient evidence.

Potash’s share price rose more than 25 per cent on Aug. 17, 2010 when it revealed and rejected BHP Billiton’s takeover bid.

Canada ultimately blocked the takeover on the ground that it did not provide a “net benefit” to the country.

— Jonathan Stempel is a Reuters correspondent covering U.S. legal and regulatory affairs from New York.

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The two chemical companies agreed to combine in an all-stock merger in December, valued at US$130 billion at the time, in a first step towards breaking up into three separate businesses.

“We are shooting for October-November kind of close of the transaction,” DuPont CEO Edward Breen said on a post-earnings call.

“Everything with the merger with Dow is right along the track we thought it would be… filings in jurisdictions around the world have happened on the schedule we needed,” he told Reuters.

DuPont said last month that the antitrust division of the U.S. Department of Justice had requested additional information and materials to assess the merger.

DuPont indicated Tuesday the second request under the Hart-Scott-Rodino Antitrust Improvement Act was anticipated and “everything is according to the timeline”.

DuPont said it was aiming to buy back US$2 billion of shares in 2016, and would make the repurchases after shareholders vote on the deal, expected to be held after completion of the SEC review.

DuPont on Monday reported a better-than-expected first-quarter profit and raised its 2016 earnings forecast, citing a weakening of the dollar against “most currencies.”

— Reporting for Reuters by Swetha Gopinath and Amrutha Gayathri in Bangalore.

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The U.S. Securities and Exchange Commission (SEC) also said three accounting and sales executives have agreed to settle charges in connection with the case.

The SEC’s case against Monsanto revolves around a corporate rebate program designed to boost sales of Roundup, a popular weed killer. The rebate program was created to combat rising generic competition which threatened to cut into the company’s profits.

The agency said that Monsanto had insufficient internal controls to account for millions of dollars in rebates that it offered to retailers and distributors. It ultimately booked a sizeable amount of revenue, but then failed to recognize the costs of the rebate programs on its books.

That led the St. Louis-based agriculture company to “materially” misstate its consolidated earnings for a three-year period.

In a statement, the company said it fully reserved funds to pay for the penalty in fiscal year 2015.

Monsanto added that it is not required to change any of its historical statements because the company already previously in 2011 restated its financial statements for fiscal year 2009 through the third quarter of fiscal year 2011.

“Public companies need to have robust systems in place to ensure that all of their transactions are recognized in the correct reporting report,” said Scott Friestad, the SEC’s associate director for the enforcement division.

In agreeing to settle, Monsanto neither admitted nor denied the charges, which include fraud. The agency did not charge the company with knowingly committing the violations.

Monsanto accounting executives Sara Brunnquell, Anthony Hartke and then-sales executive Jonathan Nienas also each agreed to pay penalties.

Brunnquell and Hartke will also be temporarily suspended from acting as accountants for public companies.

Attorneys for Brunnquell and Hartke did not have any immediate comment. An attorney for Nienas could not be immediately reached.

The SEC said it did not uncover any personal misconduct by Monsanto CEO Hugh Grant or former chief financial officer Carl Casale.

Grant and Casale previously reimbursed the company for cash bonuses and stock awards they received during the periods the violations occurred.

— Sarah N. Lynch reports on financial regulations and financial crime for Reuters from Washington, D.C. Additional reporting for Reuters by Lisa Lambert in Washington.

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Wayne Farms is a subsidiary of Continental Grain, one of the largest privately-held corporations in the U.S.

Citigroup, J.P. Morgan and BMO Capital Markets are underwriting the IPO, Wayne told the U.S Securities and Exchange Commission in a preliminary prospectus on Monday.

The filing included a nominal fundraising target of about US$100 million.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

— Reporting for Reuters by Avik Das in Bangalore.

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