Dean Foods Co., which filed for Chapter 11 bankruptcy in November, will have its assets sold in a court-administered auction process. It dropped a request to have Kansas City, Kan.-based DFA considered the stalking-horse bidder, which would set a minimum for the process.
In February, DFA made an offer to buy Dean Foods for $425 million plus the assumption of various liabilities.
Officials with Dean and DFA said Friday that they mutually agreed to withdraw the request that DFA’s bid be considered the baseline.
“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,” Anne Divjak, vice president of government relations and external communications for Dean Foods, said in an email statement.
Monica Massey, executive vice president and chief of staff for DFA, said in an email response that DFA is re-evaluating its options under the new bidding procedure.
“Ultimately, whether we end up with the 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 wrote.
The process approved by the U.S. Bankruptcy Court in Houston calls for bids to be submitted by noon on March 30. The court will hold a hearing on the sale of Dean Foods assets on April 3.
DFA is the nation’s largest dairy cooperative by membership, and the Kansas City area’s largest private company, with 2018 revenue of $13.6 billion. The cooperative generally releases the previous year’s financial report at its annual meeting in Kansas City. However, DFA postponed this year’s meeting, set for March 16-18, due to concerns about the COVID-19 outbreak.
If DFA is the winning bidder for Dean, it still is likely to face opposition due to antitrust concerns. The cooperative claims 14,000 farmer members. In addition to purchasing milk for resale to processors, DFA operates a number of dairy-product brands, including Borden Cheese, Breakstone’s Butter and Sport Shake.
The dairy industry has hit hard times of late, with consumption of milk and milk products declining. The challenge has shown from the decision by individual dairy farmers to exit the business on up to the bankruptcies of big players like Dean Foods ($7.76 billion in 2018 revenue) in November and Borden Dairy Co. ($1.2 billion in 2018) in January.