US milk producer Dean Foods has announced that Dairy Farmers of America (DFA) has been named the winning bidder to acquire a ‘substantial portion’ of the bankrupt firm’s business operations, following a court-supervised sales process.
Under the agreement, which is subject to Bankruptcy Court approval, DFA will acquire the assets, rights, interests, and properties relating to 44 of Dean’s fluid and frozen facilities, for $433 million.
Additional facilities and operations will be acquired by Mana Saves McArthur, LLC, Producers Dairy Foods, Harmoni and Prairie Farms Dairy, who, for $75 million, will take over eight of Dean’s facilities, along with other assets.
The national dairy co-op had been the frontrunner in the sales process since Dean announced that it was filing for Chapter 11 bankruptcy protection in November, and in February a deal, which made DFA the so-called ‘stalking horse’ bidder for Dean’s assets, was announced.
Under the deal, DFA agreed to pay a base purchase price of $425 million to acquire the 44 facilities. However, in recent weeks it emerged that the agreement had fallen through and that DFA was deciding whether or not to make a fresh bid on Dean’s assets.
The hearing to seek court approval for the latest agreements is scheduled for 3 April 2020, and if ratified, the transactions are expected to close at the end of April.
Commenting on the auction’s outcome, Dean’s president and CEO Eric Beringause, said: “We ran a competitive auction process and are pleased to have reached these agreements, which we believe represent the best path forward for our stakeholders.
“Dean Foods has strong and long-standing relationships with DFA and Prairie Farms Dairy.
“We are pleased that through these transactions, substantially all of our processing assets will continue to operate as dairies and will be owned by our dairy farmer partners with the resources, experience and industry expertise to continue to succeed in the current market environment.”
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