Dairy Farmers of America agreed to buy a “substantial” part of Dean Foods, the largest U.S. milk producer, for $425 million, the company said Monday.
As part of the deal, Dairy Farmers of America, an agricultural cooperative that represents roughly 14,000 dairy producers, would acquire 44 of Dean’s plants. DFA also agreed to assume some of Dean's liabilities.
The move comes after Dallas-based Dean Foods filed for bankruptcy protection in November. Dean sells dairy products under labels including TruMoo, Pet, Friendly's, Tuscan and Land O'Lakes.
“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,” Eric Beringause, president and chief executive officer at Dean Foods, said in a statement.
Dean Foods, which supplies supermarkets and schools, has struggled in recent years as the U.S. dairy industry grapples with declining milk consumption. The company's efforts to close plants and cut costs haven’t offset declining sales as more consumers turn to plant-based milk alternatives like soy. Dean is not alone in seeking court protection to survive. Borden Dairy Co., among the largest and oldest dairy producers in the U.S., in January, filed for Chapter 11 bankruptcy after more than 160 years in business.
Dean has faced declines in sales of fluid milk, a key business for the company. About 3.7 billion pounds of packaged fluid milk products were shipped by milk handlers in November, a 9.4% drop from a year earlier, according to the USDA.
The deal requires the approval of the bankruptcy court and the U.S. Department of Justice.
“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,” Rick Smith, president and chief executive officer at DFA, said in a statement.
This article originally appeared on USA TODAY: Dean Foods bankruptcy: DFA to buy 'substantial' assets for $425M
Above is from: https://finance.yahoo.com/news/dairy-farmers-america-agrees-buy-213123516.html
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THE WALL STREET JOURNAL
Bankrupt Dean Foods deals assets to dairy-farming cooperative
Published: Feb 17, 2020 3:10 p.m. ET
Executives say the sale will preserve jobs and markets for farmers’ milk
Getty Images
Dean Foods trucks outside a company facility in suburban Chicago.
By
JACOBBUNGE
The biggest U.S. dairy farming cooperative struck a $425 million deal to buy dozens of plants from bankrupt milk processor Dean Foods Co., in a deal executives said would preserve jobs and markets for farmers’ milk.
The deal, which was proposed by Dairy Farmers of America, requires approval of the bankruptcy court and the U.S. Department of Justice.
If consummated, it would see the Kansas City, Kan., agricultural cooperative take over the bulk of Dean’s plants, following the top U.S. milk company’s bankruptcy filing in November.
Dean’s DFODQ, +2.29% bankruptcy followed a yearslong decline in sales of fluid milk, the Dallas company’s main business. Bottled water, fruit juices and plant-based milk alternatives have crowded out milk cartons in grocery store beverage cases, pressuring the milk business. Dean also struggled as grocery sellers like Walmart Inc. WMT, +0.38% and Kroger Co. KR, -1.40% opened their own milk-bottling plants, expanding sales of store-brand milk that is often priced far below branded milk from processors like Dean.
Pressures are mounting on the U.S. milk sector beyond Dean. Borden Dairy Co., another Texas dairy company, filed for bankruptcy in January, also blaming falling milk consumption and retailers’ investment in bargain-priced milk. Battling low prices, thousands of dairy farmers have closed their milking parlors in recent years, according to the U.S. Department of Agriculture.
Above is from: https://www.marketwatch.com/story/bankrupt-dean-foods-deals-assets-to-dairy-farming-cooperative-2020-02-17
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