Borden Dairy cleared for sale to Capitol Peak Partners and KKR in a US$340m deal

USA Borden Dairy, an American dairy processor and distributor which filed for Chapter 11 bankruptcy protection in January this year, has been granted court approval to proceed with the sale of the business to private equity firms Capitol Peak Partners and KKR.

Borden Dairy revealed that Capitol Peak will assume majority ownership of the company, after the private equity firm and its affiliates acquired substantially all Borden assets while KKR, an existing lender to Borden, will be a minority investor in the approximately US$340 million sale.

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Following the transaction, the financially struggling dairy processor said that it will be appropriately capitalized, and the business will remain intact, including all plants, branches, routes and the Borden brand while at the same time retaining approximately 3,300 employees.

“Borden received strong investor interest and multiple bids throughout this sale process, which is a testament to the terrific work the people of Borden have done to build a valuable and enduring 163-year old brand,” said Borden CEO Tony Sarsam.

“Despite being in the midst of Chapter 11 and a global pandemic, our team managed to generate positive cash flow, grow our customer footprint and maintain an uninterrupted food supply to nourish American families. We are exiting Chapter 11 as a thriving company that is meeting and exceeding its performance forecasts, making our outlook very promising.”

Upon closing of the transaction, Borden’s former controlling and majority equity holders, ACON Investments and Grupo Lala, will no longer have ownership interest in the business and Capitol Peak and KKR will establish a new board of directors.

“Borden has a rich history of partnering with America’s dairy farmers and leading retailers to provide wholesome nutrition for American consumers and families,” said Capitol Peak’s Founder and Managing Partner Gregg Engles.

“The Capitol Peak team is excited by this unique opportunity to work alongside KKR and build this iconic dairy company.” Engles added. Engles brings extensive dairy industry experience as the former Chairman and CEO of both Dean Foods and WhiteWave Foods.

The transaction, which is subject to certain closing conditions, including the entry of a final order, is expected to be finalized in mid-July. KKR’s investment in Borden will be held by business development companies comanaged by KKR Credit.

“Borden has a long and proud history as a dairy industry leader. We are pleased to join Capitol Peak in supporting Borden and its many dedicated employees through a restructuring that cleans the slate for Borden to start a new chapter,” commented KKR Managing Director Lauren Krueger.

Borden, which was founded in 1857, initiated voluntary reorganization proceedings on January 5, 2020, to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the company for long-term success.

Today, Borden is headquartered in Dallas and operates 12 milk processing plants and nearly 100 branches across the U.S. that produce and distribute nearly 500 million gallons of milk annually. Its portfolio includes more than 35 products.

Borden also prides as the first company to develop a patent for the process of condensing milk, as well as the first company to use glass milk bottles.

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