KKR, former Dean Foods CEO win bid to buy Borden Dairy Co. in bankruptcy court
Just five months after Borden Dairy Co. announced it was filing for bankruptcy protection, the major US dairy may have a new owner.
According to the Dallas Morning News, U.S. Bankruptcy Court documents from the District of Delaware note that New Dairy Opco LLC was the winner of the auction for the majority of Borden's assets. New Dairy Opco is a team led by the former head of Dean Foods chairman and CEO Gregg Engles and KKR & Co.
The purchase is awaiting approval during a sale hearing this week.
The 163-year-old company cited falling milk consumption along with the rising price of raw milk for adding to the company's debt load.
News of the Borden bankruptcy in January came on the heels of the Nov. 12 announcement that Dean Foods, America's largest milk processor, had filed for bankruptcy, claiming a steady decline in fluid milk consumption and the public's penchant for alternative products as being to blame.
Borden said it filed for bankruptcy because it was unable afford its debt load and its pension obligations. At the time, the company employed 3,300 workers, 22% of whom were covered by a collective bargaining agreement.
According to the Dallas-based publication, KKR purchased Borden in 1995 for $2 billion and made it private after existing nearly 70 years as a publicly traded company, known for its smiling mascot Elsie the cow.
Following the announcement of the reorganization in January, Borden CEO Tony Sarsam stated that the process would "strengthen the company's position for future prosperity". However, he told the Dallas Morning News in May that he had hoped his company would have struck a deal to merge with Dean Foods, saying the deal would have resulted in a good outcome for all stakeholders and created an independent processor.
That deal never materialized as the majority of Dean Foods' assets were purchased by Dairy Farmers of America, the nation's largest dairy cooperative.
Last year marked several major milestones for the Borden, including the brand's reintroduction in Ohio, and the launch of several innovative products that earned local and national media acclaim, such as State Fair-inspired milk flavors, Gingerbread Eggnog and Kid Builder. The Company's growth last year outpaced the industry as it increased year-over-year sales.
Despite the company's numerous achievements over the past 18 months, Sarsam says the company continued to be impacted by the rising cost of raw milk and market challenges facing the dairy industry.
"These challenges have contributed to making our current level of debt unsustainable," he said at the time. "Ultimately, we determined that the best way to protect the Company, for the benefit of all stakeholders, is to reorganize through this court-supervised process."
The company received a much needed boost when it recently won a $147 million coronavirus relief contract as part of a federal effort to help farmers and distributors through the pandemic.
Under the USDA food box contract, the company was tapped to supply milk for Texas and 15 other states in the Southeast, Southwest and Midwest
"This USDA contract allows Borden to exponentially grow our coronavirus relief efforts that are already underway,” Sarsam said in a statement
Borden is headquartered in Dallas and operates 12 milk processing plants and nearly 100 branches across the US that produce and distribute nearly 500 million gallons of milk annually for customers in the grocery, mass market, club, food service, hospitality, school and convenience store channels.
In 2019, Borden landed the No. 16 spot on Forbes' list of America's Most Reputable Companies.