JBS to shed U.S. feedlot chain

The remaining feedlots in meat packing giant JBS’s Five Rivers Cattle Feeding business, the world’s biggest cattle feeding operation, have found a buyer.

JBS on Wednesday announced a deal to sell the U.S.-based assets of Five Rivers to affiliates of New York-based Pinnacle Asset Management for about US$200 million.

The deal gives Pinnacle 11 feedlots in Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas, with feeding capacity for more than 900,000 head of cattle.

It also includes a long-term agreement to supply cattle to JBS USA’s 10 North American beef packing plants, which include its Canadian plant at Brooks, Alta.

The sale to Pinnacle follows JBS’s deal last summer to sell its Five Rivers feedlot operations at Brooks to MCF Holdings, an arm of the feedlot’s previous owner, livestock trading firm Nilsson Bros., as part of JBS’s divestment program.

The current Five Rivers management team will remain in place, led by CEO Mike Thoren, Pinnacle said in a release.

Pinnacle, which focuses on commodities-based investments, plans to run the Five Rivers business in an operating partnership with Oklahoma City-based cattle feeding firm Arcadia Asset Management, founded by Fed Cattle Exchange co-founder Jordan Levi.

Another commodities investment firm, Ospraie Management, will serve as a “strategic partner” with Pinnacle.

The deal, JBS said, still requires the “usual regulatory approvals and adjustments” and Pinnacle securing the required funding. JBS said it plans to use part of the proceeds to continue to pay down debt in Brazil.

“The transaction concludes the divestment program previously announced and unanimously approved by the JBS S.A. board of directors, and more favourably positions the company for future opportunities,” JBS USA CEO Andre Nogueira said in Pinnacle’s release.

JBS’s divestment plan began last June after it became tangled in a corruption scandal which raised concerns about the Brazilian meat packing giant’s financing costs.

JBS had owned Five Rivers since 2008, buying what was then a joint venture between Smithfield Foods and Continental Grain Co. Five Rivers’ businesses date back to the late 1920s, when cattle feeding pioneer Warren Monfort began operating at Greeley, Colorado.

JBS said its partnership with Pinnacle will ensure its “continued ability to produce high-quality beef products, including natural, certified humane, raised without antibiotics, source-verified and traditional products, enjoyed by customers and consumers around the world.” –– AGCanada.com Network

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