Dairy Farmers of America will no longer serve as the stalking horse bidder for Dean Foods dairy processing assets and related businesses. However, as part of Dean Food’s Chapter 11 reorganization proceedings, the dairy cooperative still plans to bid on some of the assets.

“This week, Dean Foods requested to go forward with different bid procedures, and DFA has agreed. The new process will require interested parties to submit bids to Dean by March 30,” said Monica Massey, executive vice president and chief of staff for DFA. She said DFA is “re-evaluating our options, given current circumstances, to bid” on Dean’s assets by the March 30 deadline.

“We believe, any bid we submit will benefit all dairy farmers, as no one has a greater interest in preserving milk markets than we do. Ultimately, whether we end up with facilities or they are purchased by other parties, DFA remains committed to preserving milk markets for our members and limiting disruption to the industry,” Massey added.

In February, DFA agreed to pay a base purchase price of $425 million to acquire 44 of Dean's frozen and fluid facilities, real estate, equipment, inventory, and associated delivery systems. The co-ops "stalking horse" bid represented the initial bid on the assets of the Dean Foods, setting a floor price.

“Dean Foods simply believes that, by avoiding unnecessary litigation regarding procedure and bid protections for DFA, all parties involved, including DFA, will focus on developing competitive and value-maximizing bids,” said Anne Divjak, Vice President, Government Relations and External Communications for Dean Foods Company, in a statement.

The dairy industry — especially the thousands of farmers who could be impacted by the bankruptcy decisions — are anxiously waiting to see how DFA and Dean Foods move forward and whether or not there will be plant closures.

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In January, another large dairy processor, Borden Dairy Co., also filed for Chapter 11 bankruptcy.

“You’ve got a pretty decent size portion of fluid milk processing capacity in this country that’s in bankruptcy proceedings,” said dairy and food industry consultant Mike McCully.

For Dean Foods, losing a large portion of their school lunch business because of COVID-19 related school shutdowns hasn’t helped. Dean Foods is the largest supplier of milk for school feeding programs and a major food service provider. However, retail sales of milk are skyrocketing as more consumers shelter at home.

In terms of membership, DFA is the nation’s largest dairy cooperative with 2018 revenue of $13.6 billion. Dean Foods filed for Chapter 11 bankruptcy in November 2019. In 2018, the Texas-based firm reported almost $8 billion in revenue.

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