Dairy Farmers of America (DFA) has reached an agreement to acquire a “substantial portion” of Dean Foods’ assets and business.
The two parties have been working to reach an agreement since Dean filed for Chapter 11 bankruptcy protection in November.
As part of the proposed deal, DFA has agreed to pay a base purchase price of $425 million to acquire 44 of Dean’s facilities and associated direct store delivery system, as well as certain corporate and other assets and functions.
“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 US dairy industry,” said Rick Smith, DFA CEO.
“As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA. We are pleased that we have come to an agreement on a deal that we believe is fair for both parties.”
When announcing the bankruptcy filing, Dean Foods said it has been impacted been by a “challenging” environment marked by “continuing declines” in milk consumption.
According to the US Department of Agriculture, Americans’ per capita consumption of fluid milk has fallen 26% in the past two decades.
“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,” said Eric Beringause, Dean Foods CEO.
“I would like to thank all Dean Foods employees for their continued commitment to our customers, our partners and our company throughout this process. Their efforts have enabled us to continue providing an uninterrupted supply of high-quality dairy products, as well as support our dairy suppliers, vendors and other partners as we work to determine the best path forward for our business.”
While the parties have reached an agreement on the terms of the asset purchase, the transaction remains subject to various approvals, including from the Bankruptcy Court overseeing Dean’s Chapter 11 reorganisation and the US Department of Justice.
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