By Chris Clayton
DTN Ag Policy Editor
OMAHA (DTN) -- JBS USA has announced the sale of the world's largest cattle-feeding operation, Five Rivers Cattle Feeding, to affiliates of Pinnacle Asset Management LP, in a sale valued at approximately $200 million.
JBS USA had been shopping around for a buyer for Five Rivers Cattle Feeding since last summer after JBS' Brazilian ownership got caught in a political and bribery scandal in Brazil. After turning JBS into a global meat empire, Wesley and Joesley Batista were tied to a bribery scandal that included the president of Brazil. The two brothers were arrested last September for an insider-trading scandal tied to the earlier bribery case. Federal authorities accused the brothers of trading on the fact that the bribery scandal would become public.
Five Rivers Cattle Feeding has feeding capacity for more than 900,000 cattle in 11 feedyards across Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas. While Pinnacle will take over the feeding operations, a news release from the two companies states Five Rivers will continue delivering fed cattle to JBS USA packing plants. Further, the current leadership at Five Rivers, including president and CEO Mike Thoren, will remain in place, as will approximately 600 employees.
"The acquisition of the largest and most respected cattle-feeding operation in the world continues Pinnacle's strategic path of investment and development of our diversified, global, physical commodity platform, of which livestock is a critical sector," said Jason Kellman, managing partner and chief investment officer at Pinnacle Asset Management.
Pinnacle is a New York-based firm focused on providing institutional investors a way to invest in commodity markets. Pinnacle has approximately $2.3 billion under management.
Pinnacle is partnering with a pair of other asset-management companies to buy Five Rivers, including Arcadia Asset Management LLC, which already has other livestock marketing operations, according to the news release. The other asset-management firm involved with the purchase is Ospraie Management.
The sale comes 10 years after JBS bought Smithfield Beef Group, which included the Five Rivers Cattle Feeding operations, as well as Smithfield Food's beef processing facilities. JBS since expanded the feeding operations about 10% over the last decade before agreeing to sell to Pinnacle.
"The sale of the Five Rivers Cattle Feeding assets and farms is a strategic move that will allow JBS USA to more efficiently deploy working capital and focus on the company's core food and value-added products businesses," said Andre Nogueira, CEO of JBS USA. "The transaction concludes the divestment program previously announced and unanimously approved by the JBS S.A. board of directors, and more favorably positions the company for future opportunities. The long-term partnership with Pinnacle will ensure JBS USA's 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."
JBS USA will continue operating its beef and pork facilities in the U.S. The company also is the largest shareholder for Pilgrim's Pride, the largest poultry company in North America, the company stated.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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