ContiBeef LLC and Smithfield Foods Inc. said they will merge their cattle feedlots under a joint venture that will become the largest U.S. cattle feeding business.

Under the 50/50 deal, which should start operations by April 30, Smithfield's four feedlots and ContiBeef's six feedlots will be operated as a stand-alone company with a one-time cattle feeding capacity of 811,000 head.

That will surpass Cactus Feeders Inc. of Amarillo, Texas, which currently tops the industry with a capacity of about 500,000 head, industry sources said.

The deal comes about four months after top pork producer Smithfield entered the cattle feeding business. In October, it bought MF Cattle Feeding Inc. from ConAgra Foods Inc. That deal involved four feedlots.

ContiBeef LLC is an affiliate of ContiGroup Cos. Inc. and is one of the largest cattle feeding operations in the world, marketing more than 1 million head of cattle annually, the company said.

The new entity, which has not yet been named, will be run by Mike Thoren, who will become president and CEO. Currently, Thoren holds those positions with ContiBeef. The venture will be based in Boulder, Colo., the site of ContiBeef's corporate office.

"This will give ContiBeef some access to more capital and Smithfield more expertise in the cattle feeding business," said Jim Robb, agricultural economist with the Livestock Marketing Information Center.

Source: Yahoo News