Dallas-based Dean Foods has reached a $425 million deal to sell 44 of its milk processing facilities to Dairy Farmers of America as part of a court-supervised sale of company assets.
Dean Foods, which filed for bankruptcy in November, described the agreement as covering a “substantial portion” of its operations. The company has 57 manufacturing facilities in 29 states, including five in Texas that are part of the Dairy Farmers of America deal.
“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,” said a statement from Dean Foods CEO Eric Beringause.
Under the deal, Dairy Farmers of America also agreed to make job offers to Dean Foods workers at the 44 facilities. Dean Foods has about 15,000 employees nationwide.
The deal must be approved by a federal bankruptcy court overseeing Dean Foods’ asset sales. A hearing on the agreement is scheduled for March 12. Dean Foods can entertain higher bids for the 44 facilities until April 13.
Dean Foods said it’s in discussion with other parties for plants and assets not included in the Dairy Farmers of America agreement. Court documents indicate its investment banker, Evercore Group, received interest from 99 strategic or financial buyers after the bankruptcy filing.
As the nation’s largest dairy producer, Dean Foods spent much of last year in search of a buyer as declining milk consumption and competition from high-volume retailers like Walmart ate away at its core business. Milk consumption has steadily fallen in the U.S. since the 1970s.
Dean Foods has been operating with $850 million in court-approved financing backed by its debt holders.
The International Brotherhood of Teamsters, which represents about 5,000 of the workers, has asked the court to reject the company’s plan to award $37.75 million in bonuses to more than 2,000 supervisory and salaried employees.
Dean Foods’ portfolio includes national brands DairyPure and TruMoo, along with regional brands including Alta Dena, Berkeley Farms, Country Fresh, Dean’s, Friendly’s, Garelick Farms, Land O Lakes, Lehigh Valley Dairy Farms, Mayfield, McArthur, Meadow Gold and Oak Farms. It also makes private label dairy products, ice cream, cultured products, juices, teas and bottled water.
A few months after Dean Foods’ bankruptcy, another Dallas-based milk company took a similar path, citing “unsustainable” debt.
The 163-year-old Borden Dairy Co. initiated bankruptcy proceedings in January. Founded in 1857, it was the first milk company to use glass milk bottles. Its 12 processing plants distribute nearly 500 million gallons of milk every year.