Both sides are ramping up their efforts to sway shareholders of JBS ahead of a Sept. 1 shareholder meeting on the fate of Batista, who has been at the helm of the food processor since Jan. 2011 - when he took over from his younger brother Joesley.

The showdown is a reminder of the Brazilian government's once cozy ties with JBS and the Batistas, and the support Wesley still has among some shareholders. In addition to ousting Wesley as CEO, shareholders will also vote on resolutions to sue him and other executives, plus a proposal to give the C-suite a pay raise.

While the result is hard to predict, almost a dozen bankers, company insiders and investors asking to remain anonymous said they had grown skeptical of Batista's argument, made in investor meetings in New York this month, that he is uniquely able to finalize two upcoming asset sales and list a U.S. food subsidiary next year.

In those meetings, Batista played up his success in recently clinching a $6.5 billion debt refinancing deal and securing cattle from ranchers despite their concern that his plea deal would pinch JBS's cash, investors said.

At the same time Batista has suggested he is open to stepping down once he is done with the slate of deals on his agenda, three of the people said. He also told them third-quarter results could be among "the strongest" in JBS's history because of a recovery in food processing arm Seara and solid U.S. operations.

In a statement to Reuters, JBS said it "has worked intensely to adopt several measures looking to protect the best interests of the company and shareholders." The company declined to comment further.

While some investors praised the 47-year-old's leadership skills, one said a rift with BNDES could "draw blood" if Batista stayed. Minority JBS shareholders include U.S. retirement funds and mutual funds like Fidelity Investments and Vanguard Group.

BNDES representatives have been aggressively trying to convince investors that Batista was not suited to run JBS, four people familiar the bank's strategy said. If needed, BNDES, which has a 21 percent stake in JBS, could ask securities watchdog CVM to bar the Batistas from casting ballots in the Sept. 1 assembly, one of them said.

Wesley and Joesley Batista control 42 percent of JBS.

GRADUAL DEPARTURE

Still, the CEO's departure could take place in a gradual and orderly way, BNDES President Paulo Rabello de Castro told reporters on Aug. 8. State-controlled bank Caixa Econômica Federal, which has 5 percent of JBS, is likely to vote in line with BNDES, he noted.

Another person close to the bank's strategy said BNDES does not oppose Batista joining the meatpacker's recently created executive committee, which oversees strategy but is not involved with day-to-day operations.

This week, proxy voting firm Institutional Shareholder Services Inc recommended JBS shareholders vote to sue Batista and against plans to increase pay. BNDES and Caixa declined to comment.

One factor playing against the ouster plan was a lack of strong potential replacements, some bankers and investors said. Still, BNDES could endorse Chairman Tarek Farahat as a potential successor, said one person familiar with the bank's strategy.

Some investors suggested that BNDES, as a state bank run by an appointee of Brazilian President Michel Temer, may have a conflict of interest. Temer was ensnared in the Batistas' plea bargain and has repeatedly denied any wrongdoing.

"Batista could still draw investor support because it's not clear what the alternative BNDES plan is, and no one wants the risk of an uncontrolled change," another investor said.

BNDES's dual roles as representative of the scandal-plagued government and a creditor and shareholder of JBS are "suspicious," one investor said. Most lenders that took part in JBS's refinancing deal are siding with the BNDES, as Batista's pledge to downsize JBS is "set in stone," one banker said.

JBS, which became a domestic behemoth through a series of self-financed local takeovers, began leaning heavily on BNDES in 2005, when Joesley Batista pitched bank officials on making JBS into a dominant global player, he told prosecutors in May.

The company used more than $3 billion in BNDES loans to make acquisitions in the United States and elsewhere. When the deals took a toll on JBS's debt, BNDES again came to the rescue.

"It was in that context that the idea of creating a great Brazilian multinational firm was given birth," Joesley Batista told prosecutors in a taped testimony dated May 3. Without the BNDES, "it wouldn't have happened so fast," he added.

($1 = 3.168 reais)

(Additional reporting by Rodrigo Viga Gaier in Rio de Janeiro and Tatiana Bautzer in São Paulo; Editing by Christian Plumb and Andrew Hay)