Dean Foods Co. has reached an agreement to sell much of its business operations to Dairy Farmers of America for $425 million, pending approval by a federal bankruptcy court and the Justice Department.
DFA, the nation’s largest dairy cooperative, would acquire 44 of Dean Foods’ plants that produce fluid and frozen products, according to statements by the firms on Monday.
“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.
DFA will formally make an offer for Dean Foods as a “stalking horse” bidder, which has the effect of setting the low bid for the assets.
A bankruptcy court hearing is scheduled for March 12.
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The Justice Department also has been investigating the potential market impact of a DFA acquisition of Dean Foods, the Wall Street Journal reported last month.
DFA’s president and CEO, Rick Smith, alluded to those market concerns in the co-op's statement announcing the agreement.
"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."
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