USA – The Dairy Farmers of America (DFA) has entered into an asset purchase agreement with America’s largest farmer-owned dairy cooperative, Dean Foods to acquire a substantial portion of Dean Foods’ business operations.
As part of the agreement with DFA, Dean Foods will sell 44 of its fluid and frozen facilities and the real estate, inventory, equipment, and all other assets necessary to operate such facilities for about US$425 million.
If approved by the Bankruptcy Court at a hearing scheduled for March 12, 2020, DFA will serve as a “stalking horse bidder” for the Stalking Horse Assets in a court-supervised sales process.
The agreement with DFA will therefore sets the floor for the sale of the Stalking Horse Assets.
Dean Foods however noted that proposed agreement is subject to higher offers, and the company looks forward to working with its bondholders and other potentially interested parties in connection with their bids.
The dairy giant further revealed that the company is also in active discussions with parties interested in the plants and assets that are not included in the deal with Dairy Farmers of America.
Commenting on the agreement with DFA, Eric Beringause, President and CEO of Dean Foods 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.
“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.”
“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 filed for bankruptcy in November last year citing challenges in staying afloat in the volatile dairy market.