(Updates share performance; adds bylines, changes dateline to ABU DHABI/SAO PAULO)
By Stanley Carvalho and Guillermo Parra-Bernal
ABU DHABI/SAO PAULO, June 16 (Reuters) - Shares of JBS SA erased gains on Friday after a source denied that Abu Dhabi sovereign wealth fund Mubadala Development Co PJSC was arranging partners to make a bid for control of the world's largest meatpacker.
A person with direct knowledge of Mubadala's strategy told Reuters that, despite a report by Brazilian business magazine Exame earlier in the day, there was no interest or intention at this point to bid for JBS.
The source asked not to be identified in order to speak freely about the matter.
A spokesman for Mubadala declined to comment. Exame, which did not say how it obtained the information, said companies including U.S. food producer Cargill Inc might be interested in acquiring certain JBS assets, such as Pilgrim's Pride.
Exame did not name the potential partners that it said Mubadala had sounded out for a JBS bid. The magazine report came a month after members of the billionaire Batista family, who control about 42 percent of JBS, signed a plea deal in a corruption probe in their native Brazil.
Shares of JBS erased gains after the source denied the Exame report, falling 1.9 percent to 6.63 reais at 1:55 p.m. local time (1655 GMT). They had risen as much as 5.9 percent earlier.
The Batista family's investment holding company J&F Investimentos SA, São Paulo-based JBS and Cargill did not have an immediate comment.
Last month, the Batistas agreed to pay a record-setting fine of 10.3 billion reais ($3.1 billion) related to corruption and bribery allegations. Shares of JBS have shed 29 percent since May 16, when brothers Joesley and Wesley Batista admitted in separate plea deals to bribing over 1,800 politicians.
Part of the testimonies in the plea deal implicated President Michel Temer, who Joesley Batista accused of working to obstruct a major corruption probe. Temer denies the accusations.
State loans helped fuel growth at J&F over the past decade, enabling it to keep control of JBS while expanding into fashion, dairy production, pulp processing and banking. JBS grew from a mid-sized slaughterhouse in Brazil's Midwest into one of the world's top-three food processing companies in over a decade through acquisitions backed in part by government funds.
$1 = 3.28 reais Additional reporting by Bruno Federowski and Tatiana Bautzer in São Paulo; Editing by Phil Berlowitz and Tom Brown