Dean Foods announced Dairy Farmers of America has emerged as the winning bidder for a “substantial portion” of the bankrupt milk processor’s assets, while a number of other businesses have bought up some of the remaining plants across the US.
Dairy Farmers of America (DFA), the Kansas-based cooperative, will acquire 44 of Dean Foods fluid and frozen dairy facilities for US$433m subject to the approval of the bankruptcy court with which the troubled business filed a Chapter 11 notice last November.
Until just over a week ago, DFA was the so-called stalking horse bidder for the assets it is now set to acquire, setting the floor for any other interested parties looking to put in a counter offer. That convenant was withdrawn on 23 March, with DFA weighing up whether to remain in the running.
Meanwhile, Dallas-based Dean Foods, which in 2018 had as many as 60 plants and around the same number of brands spread across 50 states, announced the other winning bidders for select assets. Prairie Farms Dairy; Mana Saves McArthur; Producers Dairy Foods; Harmoni Inc.; and Industrial Realty Group.
Eric Beringause, Dean Foods president and chief executive, said: “We ran a competitive auction process and are pleased to have reached these agreements, which we believe represent the best path forward for our stakeholders. Dean Foods has strong and long-standing relationships with DFA and Prairie Farms Dairy.
“We are pleased that through these transactions, substantially all of our processing assets will continue to operate as dairies and will be owned by our dairy farmer partners with the resources, experience and industry expertise to continue to succeed in the current market environment. We are committed to completing these transactions as quickly as possible, and to ensuring a smooth transition for our customers.”
Illinois-based co-op Prairie Farms Dairy will acquire the assets, rights, interests, and properties relating to another eight of Dean Foods facilities, two distribution branches and “certain other assets” for $75m in cash.
Mana Saves McArthur and Producers Dairy Foods in California will separately take plants located in Miami, Florida, and Reno, Nevada, respectively.
Harmoni Inc. wins Dean Foods Uncle Matt’s business.
And Los Angeles-based real estate firm Industrial Realty Group will acquire the Meadow Gold Hawaii operations as an “ongoing business”, including the assets, rights, interests, and properties relating to Dean Foods’ Hilo and Honolulu facilities. Dean Foods added that Industrial Realty will be partnering with 8 Cow Dairies in Hawaii to manage the operations.
Beringause continued: “We are pleased to have reached an agreement in principle for our Meadow Gold Hawaii facilities and that Industrial Realty Group intends to continue these facilities on an ongoing basis.”
Dean Foods said all of the agreements are subject to court approval and certain other closing conditions, with a court hearing scheduled for 3 April. Once passed and approved, the company expects the deals to close by the end of the month.