US dairy farmers agree to buy “substantial portion” of Dean Foods’ business operations
19 Feb 2020 --- Dean Foods and some of its subsidiaries have entered into an asset purchase agreement with Dairy Farmers of America (DFA) through which DFA will acquire a substantial portion of Dean Foods’ business operations. If consummated, DFA – a major farmer-owned cooperative – will acquire 44 of the company’s fluid and frozen facilities and the real estate, inventory, equipment, and all other assets necessary to operate such facilities (the Stalking Horse Assets).
Last November, the company filed for Chapter 11 bankruptcy citing the decline in consumption of cow’s milk and the growth in demand for plant milk. This came some months after the company revealed it is “reviewing strategic alternatives to accelerate business transformation,” and is exploring a number of options, including a potential sale.
“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,” says Eric Beringause, President and Dean Foods CEO.
If approved by the Bankruptcy Court at a hearing scheduled for March 12, 2020, DFA will serve as a “stalking horse bidder” for the Stalking Horse Assets in a court-supervised sales process, whereby the agreement with DFA will set the floor for the sale of the Stalking Horse Assets.
Accordingly, the proposed agreement is subject to higher or otherwise better offers, and the company says that it looks forward to working with its bondholders and other potentially interested parties in connection with their bids.
The deadline for interested parties to furnish information to be considered a potential bidder for any or all of the Stalking Horse Assets is currently scheduled for March 31.
Bids can be submitted in the form of an asset purchase or a plan of reorganization. The company is also in talks with parties interested in the plants and assets that are not included in the Stalking Horse Assets.
In addition to Bankruptcy Court approval, the proposed transaction with DFA is subject to various closing conditions, including antitrust clearance.
Edited by Gaynor Selby
