DFA buys the lion's share of Dean Foods assets
Despite a recent announcement that Dairy Farmers of America would not be the lead bidder in the March 30 Dean Foods bankruptcy sale, the country's largest dairy cooperative was the winning bidder of a majority of Deans assets.
According to the sale agreement, which is subject to final approval by the Bankruptcy Court, DFA will acquire the assets, rights, interests, and properties relating to 44 of the Company’s fluid and frozen facilities for $433 million.
In response to objections by farmers, shareholders and other industry stakeholders over antitrust concerns, DFA and Dean called off its $425 million deal with DFA as a stalking-horse.
RELATED: Dean Foods, DFA call of $425M deal
In addition to bankruptcy court approval, the U.S. Department of Justice needs to sign off on the deal. The DOJ is currently investigating antitrust issues surrounding DFA's purchase of a majority of the nation's largest milk processor.
Joel Greeno, president of the farm advocacy group Family Farm Defenders, was among stakeholders that reached out to lawmakers and attorney general offices in dairy-producing states to look into the pending sale.
"Neither Dean nor DFA is a stand alone company. Each has pieces of them that reach into half of the dairy entities in the country," Greeno said. "You can't take the two most corrupt dairy entities in the country and turn them into one thinking it will be business as usual."
DFA also would need to finalize collective bargaining agreements with multiple unions, Monica Massey, executive vice president and chief of staff, said in a written statement.
“Throughout this process, our main focus has always been, and continues to be, on maintaining milk markets and limiting disruption to the industry,” Massey said.
Greeno says the sale would have far-reaching impact on dairy producers.
"DFA says they have every interest in paying farmers better. Like hell. They have no history of doing that ever," he said.
Although the bids have been cast and accepted, Greeno the deal could still be upended by the U.S. DOJ or a state's attorney general.
"Even with the judge moving forward with the sale, some of us know, even with all the distractions going on right now, the message is clear – there are a lot of people upset about this," Greeno said. "We feel strongly that this is an antitrust issue that must be looked at."
In addition, as part of the court-supervised sale process, Dean Foods has designated Prairie Farms Dairy as the winner of the assets, rights, interests, and properties relating to 8 additional facilities, 2 distribution branches and certain other assets for $75 million in cash.
Dean Foods has designated Mana Saves McArthur, LLC, and Producers Dairy Foods as winning bidders for the sale of the facilities located in Miami, Florida and Reno, Nevada, respectively. Harmoni, Inc. has been designated as the winning bidder for the Uncle Matt’s business.
Dean President and CEO Erik Beringause said it ran a competitive auction process which he believes represents the best path forward for the company's stakeholders.
"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," he said in a statement.