Milk processor Dean Foods Co. undid its designation of Dairy Farmers of America Inc. as the lead bidder at a planned bankruptcy sale, removing bid protections that favored the dairy cooperative.
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But as part of Dean Food’s Chapter 11 reorganization proceedings, the dairy cooperative still plans to bid on some of the assets. Dean in papers filed Wednesday with the U.S. Bankruptcy Court in Houston said it agreed to “mutually terminate” an asset purchase agreement with DFA, which has offered $425 million for 44 of Dean’s processing facilities and other assets.

DFA comments: “This week, Dean Foods requested to go forward with different bid procedures, and DFA has agreed. The new process will require interested parties to submit bids to Dean by March 30,” said Monica Massey, executive vice president and chief of staff for DFA. She said DFA is “re-evaluating our options, given current circumstances, to bid” on Dean’s assets by the March 30 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. 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,” Massey added.

Dean Foods comments. “Dean Foods simply believes that, by avoiding unnecessary litigation regarding procedure and bid protections for DFA, all parties involved, including DFA, will focus on developing competitive and value-maximizing bids,” said Anne Divjak, Vice President, Government Relations and External Communications for Dean Foods Company, in a statement.

Background. In February, DFA agreed to pay a base purchase price of $425 million to acquire 44 of Dean’s frozen and fluid facilities, real estate, equipment, inventory, and associated delivery systems.

The moods of many dairy producers have been boosted by the first quarter performance of their dairy. With significantly higher milk check prices year-over-year, most dairies are making profitable margins according to Trent Dado, independent dairy nutrition and management consultant with GPS Consulting.

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