Under terms of the deal, DFA would acquire 44 of Dean Foods’ fluid and frozen plants, including real estate, inventory, equipment and other assets necessary to operate the facilities,
Dallas-based Dean Foods, which filed for bankruptcy protection in November 2019, markets dairy products under 50 national and regional brands including DairyPure, TruMoo and Land O'Lakes among others. Dean Foods also manufactures private label dairy products, ice cream, cultured products, juices, teas and bottled water.
DFA is an organization of more than 14,000 local, family farmers from across the country. Divided into seven geographic areas, its grassroots structure is ensures every member is represented through by an elected 49-member Board of Directors.
“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,” DFA President and CEO Rick Smith said. “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.”
Commenting on the deal, Dean Foods President and CEO Eric Beringause said: “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.”
If approved by the bankruptcy court at a hearing on March 12, DFA will serve as a stalking horse bidder in a court-supervised sales process whereby the agreement with DFA will set the floor for the sale of the stalking horse assets. Dean Foods said the proposed agreement is subject to higher or otherwise better offers. The deadline for interested parties to furnish information to be considered a potential bidder for any or all of the stalking horse assets is currently scheduled for March 31. Bids may be submitted in the form of an asset purchase or a plan of reorganization.
According to the Wall Street Journal, some farm groups have raised concerns that a tie-up between Dean and DFA might lead to an excessive concentration of milk buyers in parts of the country. As U.S. milk consumption has fallen about 40% over the last four decades, fluid-milk production has shifted to a smaller number of bigger plants. WSJ also reported the U.S. Department of Justice is investigating the potential impact of such a deal on milk prices and competition in the dairy business.