Dairy Farmers of America Inc. announced on Monday that an agreement has been reached with Dean Foods for the farmer-owned cooperative to become the stalking-horse bidder to acquire a substantial portion of Dean’s assets and business. The two parties have been working to reach an agreement since DFA became aware of Dean’s plan to initiate voluntary Chapter 11 reorganization proceedings.
As part of the proposed deal, DFA has agreed to pay a base purchase price of $425 million and assume various liabilities, subject to certain adjustments, to acquire 44 of Dean’s facilities and associated direct store delivery system, as well as certain corporate and other assets and functions.
While the parties have reached an agreement on the terms of the asset purchase, the transaction remains subject to various approvals, including approval from the Bankruptcy Court overseeing Dean’s Chapter 11 reorganization and the U.S. Department of Justice.
“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 Chief Executive Officer. “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.”
Dean Foods announced in November of 2019 it had filed for Chapter 11 bankruptcy and was considering the sale of its assets.
If approved by the bankruptcy court, the agreement would make Dairy Farmers of America the stalking-horse bidder — which means DFA has set the low-end bidding bar so that other bidders can’t underbid the purchase price. The transaction would be subject to receiving only higher or better offers while the company is in bankruptcy.
