Dairy Farmers of America (DFA) announced Feb. 17 that it has reached a $425 million agreement 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.
If completed, DFA will acquire 44 of the company’s fluid and frozen facilities and the real estate, inventory, equipment and all other assets necessary to operate such facilities. 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 back in November.
“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,” Dean president and chief executive officer Eric Beringause said.
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,” 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.”
If approved by the bankruptcy court at a hearing scheduled for 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. However, Dean 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.
Further, Dean said it is also in active discussions with parties interested in the plants and assets that are not included in the stalking horse assets. The deadline to furnish information to be considered a potential bidder for the plants and assets that are not subject to the DFA bid is also currently scheduled for March 31. The deadline for potential bidders to submit a qualified bid for the stalking horse assets or any of the plants or assets not included in the DFA bid is April 13. A list of entities included and excluded from the Dean/DFA asset purchase agreement is available here.
“I would like to thank all Dean Foods employees for their continued commitment to our customers, our partners and our company throughout this process,” Beringause said. “Their efforts have enabled us to continue providing an uninterrupted supply of high-quality dairy products as well as support our dairy suppliers, vendors and other partners as we work to determine the best path forward for our business.”
This article originally appeared on Feedstuffs, a Supermarket News sister website.