Dairy Farmers of America (DFA) has confirmed that its deal with Dean Foods, whereby the national dairy co-op agreed to acquire a “substantial portion” of the bankrupt firm’s assets and business, has fallen through.
Under the proposed deal, which was announced in February, DFA agreed to pay a base purchase price of $425 million to acquire 44 of Dean’s facilities and the inventory, equipment and other assets necessary for their operation.
US milk producer Dean first announced it was filing for Chapter 11 bankruptcy protection in November, at which point the business said that discussions with DFA regarding a proposed sale were already at an “advanced” stage.
The deal announced in February, which remained subject to various approvals, including by the Bankruptcy Court, would make DFA the so-called ‘stalking horse bidder’ in a court-supervised sale process.
If it was approved, DFA would have had the first bid on Dean’s assets in an auction process and thereby determine the low-end bidding bar. However, according to the recent statement the deal has been called off.
In this statement, Monica Massey, DFA’s executive VP, said: “Dean Foods requested to go forward with different bid procedures, and DFA has agreed.”
No further explanation was given. However, Bloomberg reported that Dean Foods abandoned the agreement after resistance from creditors and its bankruptcy judge.
The new process will require interested parties to submit bids by 30 March, and DFA is currently deciding whether or not to participate.
“DFA is re-evaluating our options, given current circumstances, to bid on Dean’s assets by the 30 March deadline. We believe, any bid we submit will benefit all dairy farmers, as no one has a greater interest in preserving milk markets than we do,” said Massey.
“Ultimately, whether we end up with facilities or they are purchased by other parties, DFA remains committed to preserving milk markets for our members and limiting disruption to the industry.”
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