logo
Plus   Neg
Share
Email

Dairy Farmers Of America To Buy Substantial Portion Of Dean Foods

deanfoods feb18 lt

Dairy Farmers of America or DFA on Tuesday inked an agreement with bankrupt diary company Dean Foods Co. to become the Stalking Horse Bidder, in a court-supervised sale process, to acquire a substantial portion of Dean's assets and business.

While filing for bankruptcy in November last year, Dean Foods had said it was in advanced discussions with the farmer-owned Cooperative regarding a potential sale of substantially all assets of the company. Dean Foods is already a significant customer of DFA over the past 20 years.

Under the asset purchase agreement, the Stalking Horse Bidder has agreed to acquire 44 of Dean's facilities and associated direct store delivery system, as well as certain corporate and other assets and functions. It agreed to pay a base purchase price of $425 million, and assume liabilities, subject to certain adjustments.

However, the transaction remains subject to various approvals, including approval from the Bankruptcy Court overseeing Dean Foods' Chapter 11 reorganization and the U.S. Department of Justice.

The closure of the deal is also subject to the receipt of higher or otherwise better offers, before March 31, 2019 in this case.

Dallas, Texas-based Dean Foods is the largest processor and direct-to-store distributor of fresh fluid milk and other dairy case products in the U.S. It has 60 manufacturing facilities in 32 U.S. states and distributes its products across all 50 states. Its products include milk, ice cream, dairy products, cheese, juice, and teas.

Since February 2019, the Board, has been mulling a possible sale of the company.

The Board then determined in September that the execution of its standalone operating plan under the leadership of Eric Beringause, who was appointed as President and CEO on July 29, 2019, will provide the best opportunity to enhance long-term shareholder value.

In November, Dean Foods and substantially all of its subsidiaries initiated voluntary Chapter 11 reorganization proceedings in the U.S. Bankruptcy Court for the Southern District of Texas. It secured commitments for $850 million in DIP financing from certain of its existing lenders to support operations.

The company cited their debt and pension obligations as the reason for their bankruptcy filing. They also cited reason for the bankruptcy being the changing demand for milk and milk-related products.

For comments and feedback contact: editorial@rttnews.com

Business News

RELATED NEWS
Follow RTT
>