DFA Agrees to $425M Purchase of Dean Foods Assets

Dairy Farmers of America (DFA) announced today it has agreed to acquire a “substantial portion” of dairy producer Dean Foods’ assets for a base price of $425 million as a stalking horse bidder.

According to a press release from Dean Foods, DFA is set to acquire 44 of Dean’s liquid and frozen facilities, including real estate, inventory, equipment, direct store delivery system and other corporate assets.

“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 Dean Foods, in the release.

The announcement comes four months after Dean announced it had filed for Chapter 11 bankruptcy protection. At the time, Dean Foods indicated it was in “advanced discussions” with DFA to sell the company and DFA EVP and chief of staff Monica Massey confirmed to BevNET that the companies were in the negotiating process.

Although the two companies have reached an agreement, the acquisition must be approved by the Bankruptcy Court overseeing Dean’s Chapter 11 reorganization and the U.S. Department of Justice. A hearing in the Bankruptcy Court is scheduled for March 12. According to the press release, the agreement is “subject to higher or otherwise better offers.” From there, outside parties will have until March 31 to submit competing bids.

Bids for additional assets owned by Dean Foods outside of the stalking horse assets can be submitted until April 13.

In a second press release, DFA noted the two companies had been in discussions for the acquisition “since DFA became aware of Dean’s plan” to file for bankruptcy.

“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. “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.”

At press time, DFA had not responded to questions sent by BevNET. A spokesperson cited a large influx of press inquiries.