Dean Foods has entered an asset purchase agreement with Dairy Farmers of America (DFA), in which DFA will acquire a substantial portion of Dean Foods’ business operations for $425 million. The operations include 44 fluid and frozen dairy facilities along with the real estate, inventory, equipment and other assets needed to operate them.
Dean Foods filed Chapter 11 bankruptcy late last year to protect its assets until the deal with DFA can be finalized.
“We have had a relationship with DFA over the past 20 years, and we are confident in their ability to succeed in the current market and serve our customers with the same commitment to quality and service they have come to expect,” said Eric Beringause, president and CEO of Dallas-based Dean Foods. He went on to thank employees for continuing to operate and supply high-quality dairy to suppliers, vendors and other partners.
“As Dean is the largest dairy processor in the country and a significant customer of DFA, it is important to ensure continued secure markets for our members' milk and minimal disruption to the U.S. dairy industry,” said Rick Smith, president and CEO of DFA, Kansas City, Kan. “As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA. We are pleased that we have come to an agreement on a deal that we believe is fair for both parties.”
If the deal is approved by the bankruptcy court in a hearing scheduled for March 12, DFA will serve as a “stalking horse bidder” in a court-supervised sale process, whereby the agreement with DFA will set the floor for the sale of the stalking horse assets. Accordingly, the proposed agreement is subject to higher or otherwise better offers, and Dean Foods looks forward to working with its bondholders and other potentially interested parties in connection with their bids. The deadline for other interested parties to furnish information to be considered a potential bidder for any or all of the stalking horse assets is March 31.