The remaining shares of Serya are held by Brazilian cheese bread maker Forno de Minas, in which McCain acquired a 49 per cent stake in March 2018, the company said in a statement on Friday.

A person familiar with McCain’s operations in Brazil told Reuters that McCain’s Brazilian subsidiary received a $15 million capital injection from the parent company this week to secure the deal.

The source, who asked not be named to openly discuss the company’s plans, said McCain also expects to buy the remaining stake in Forno de Minas within the next five years.

Based in Araxa, a city in the southeastern state of Minas Gerais, Serya has a factory in Brazil with an annual production capacity of 12,000 tons. Its acquisition is seen as McCain’s first step to produce frozen potatoes locally.

So far, the company supplies the Brazilian market, including fast-food chains such as McDonald’s, with products imported from other countries, mostly Argentina.

“Brazil is the world’s fifth largest market for frozen potatoes, with large potential to become the third by 2021,” McCain’s general-director for Brazil, Aluizo Neto, said in a statement.

— Reporting for Reuters by Gabriela Mello.

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Wesley Batista, who has been at the helm of JBS since 2011, was detained under an arrest warrant against him and his younger brother Joesley for suspected insider trading. The billionaires, both in their mid-40s, control 42 per cent of JBS.

Their lawyer, Pierpaolo Bottini, called the allegations and the arrest “unjust, absurd and regrettable.” If convicted, the Batistas may be the first people in Brazil jailed for insider trading.

JBS shares rose 1.7 per cent, reversing early losses, on optimism that Wesley Batista’s arrest will accelerate a search by the company to replace him as CEO. The accusations could hurt a plea deal that both brothers signed in May in relation to a three-year graft probe that has shocked Brazil’s political and business establishment.

The insider trading case involving JBS follows probes by markets watchdog CVM on trades that took place before the plea deal was leaked to the press on May 17. The impact from the leak, which ensnared senior politicians, led to Brazil’s worst financial market selloff in at least a decade.

According to police investigators, the Batistas were aware of the market impact that their plea deal would have on JBS shares and the currency. Police said the brothers created a strategy to protect their JBS holding and help the company amass large foreign-currency positions ahead of the leak.

On May 18, the stock shed 9.7 per cent, while the Brazilian real tumbled 8.2 per cent — its biggest daily decline since January 1999.

“A day ahead of the leaks, JBS rose to the No. 2 spot in currency purchases, an unheard of fact,” police investigator Rodrigo de Campos Costa said in a news conference.

BNDES calls for new CEO

The detention of Wesley Batista comes as his plea deal with prosecutors is unraveling due to alleged omissions in the brothers’ testimony. Some minority shareholders were already seeking to remove him.

“It is not every day that a CEO getting arrested for insider trading can be viewed as a credit positive, but we see the latest events as weakening Batista’s push to remain as CEO,” analysts at CreditSights Inc. wrote in a note to clients.

The yield on the company’s 7.75 per cent bond due in October 2020 rose about 0.17 percentage points to 7.966 per cent on Wednesday.

Joesley Batista has been under arrest since Sunday after recordings suggested he tried to take advantage of prosecutors and conceal details during negotiations that led to the plea deal. He has denied any wrongdoing.

In their testimony, the brothers accused President Michel Temer of working to obstruct a corruption probe, which the latter has repeatedly denied. The family’s investment holding company, J+F Investimentos SA, paid a record leniency fine of 10.3 billion reais (C$4.01 billion) related to the scandal.

Since the plea bargain deal was signed on May 31, Temer and the Batistas have traded barbs — taking their rift to corporate boardrooms. State development bank BNDES, whose investment arm owns 21 per cent of JBS, is leading the group of JBS investors seeking to oust the Batistas from the company’s management and board.

In a statement, BNDES said the company should pick a new CEO in the next shareholders meeting.

Bottini, the Batistas’ lawyer, earlier in the day, said: “The Brazilian state is using all means to promote revenge against those who co-operated with justice.”

The police said two detention orders were also issued against executives at the Batista family-owned FB Participacoes SA and JBS, without elaborating.

The scheme helped “manipulate markets in a way that all shareholders incurred some of the losses that FB Participacoes would have otherwise had to absorb alone,” a police statement said.

— Reporting for Reuters by Guillermo Parra-Bernal and Gabriela Mello; additional reporting by Pedro Fonseca in Rio de Janeiro and Tatiana Bautzer in Sao Paulo.

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