Dairy Farmers of America Inc. made an official offer to buy the nation’s largest milk processor Monday for $425 million plus the assumption of various liabilities.
Despite concerns from federal antitrust regulators and bondholders, DFA and Dean Foods Co. (NYSE: DF) announced an agreement for the Kansas City, Kansas-based cooperative to “become the stalking horse bidder to acquire a substantial portion of Dean’s assets and business.”
The proposed deal includes acquiring 44 of the Dallas-based dairy company’s facilities, its delivery system and some of its other assets. The facilities include the Morning Glory dairy plant in De Pere. The transaction is subject to various approvals, including approval from the Bankruptcy Court overseeing Dean’s bankruptcy reorganization and the Department of Justice.
“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 U.S. dairy industry,” DFA CEO Rick Smith said in a Monday release. “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.”
Dean Foods, which filed for Chapter 11 bankruptcy protection in November, reported revenue of $7.76 billion in 2018.
DFA reported 2018 revenue of $13.6 billion. It also is the largest dairy cooperative by membership.
DFA was advised by international law firm Latham & Watkins LLP, St. Louis-based law firm Bryan Cave Leighton Paisner LLP and Los Angeles-based investment bank Houlihan Lokey Inc.