New York-headquartered Pinnacle Asset Management has agreed to acquire the US-based cattle feeding unit of JBS USA for approximately $200 million.
Collectively known as Five Rivers Cattle Feeding, the unit was originally established during the 1920s and includes 11 feed lots located throughout Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas. Five Rivers has feeding capacity for 900,000 heads of cattle and a staff of 600.
Pinnacle has entered into a long-term supply agreement with JBS USA beef processing plants, and Oklahoma City-headquartered cattle feeding operator Arcadia Asset Management will act as its operating partner for Five Rivers. Ospraie Management, a New York-based, commodities-focused asset management firm, will work with Pinnacle as a “strategic partner” on the transaction.
“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 program, of which livestock is a critical sector,” said Jason Kellman, Pinnacle’s chief investment officer.
According to regulatory filings shown earlier this month, Pinnacle raised a total of $202.5 million from six investors making commitments to two vehicles, each named Pinnacle Arcadia Cattle Partners (I and II, respectively.)
A source familiar with the transaction told Agri Investor that capital for the Five Rivers deal came from those vehicles.
Pinnacle and JBS declined to comment further.
JBS USA chief executive Andre Nogueira highlighted that the company’s supply agreement with Pinnacle meant that it would continue to provide customers with beef products, including “natural, certified humane, raised without antibiotics, source-verified and traditional products.”
The sale marked the completion of a divestment program launched by parent group JBS SA in June to reduce debt, after the company found itself implicated in Brazil’s “weak meat” corruption scandal, among other meat processors.
“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 business,” Nogueira said.