As proposed, the order includes the approval of the sale of 44 Dean facilities to Dairy Farmers of America (DFA), the nation’s largest dairy co-op, for $433 million.
The court also approved the sale, subject to entry of final agreed orders of the assets, rights, interests and properties relating to:
- Eight additional facilities, two distribution branches and certain other assets to Prairie Farms Dairy for $75 million in cash
- A facility in Miami, Florida, to Mana Saves McArthur LLC for $16.5 million
- A Reno, Nevada, facility to Producers Dairy Foods for $3.7 million – Producers Dairy Foods also purchased the “Berkeley Farms” trademark and related intellectual property for $3 million.
- Uncle Matt’s business to Harmoni Inc. for $7.25 million
- Meadow Gold Hawaii operations as an ongoing business to Industrial Realty Group LLC for $25.5 million
A list of entities included in each transaction is available here. Each transaction remains subject to customary closing conditions, including any required regulatory approvals. Dean Foods anticipates completing all transactions by early May.
“Following the competitive court-supervised auction process, and with the court’s approval, we have determined a combination of bids that represent the best path forward for our stakeholders,” said Eric Beringause, president and CEO of Dean Foods. “We are confident that under these new owners our customers can expect the same commitment to quality and service that Dean Foods has lived up to over the years. We will continue to provide an uninterrupted supply of high-quality dairy products as we work towards completing these transactions.”
In announcing his approval, Judge Jones cited the need for the rapid transition of Dean assets to new owners to protect the future of up to 15,000 employees in a weakening U.S. economy.
The sale approval followed a whirlwind week under the backdrop of the COVID-19 crisis and a souring dairy economy that likely saw Dean liquidity deteriorating. Bid submissions for Dean assets closed on March 30, and attorneys representing Dean posted court documents (docket #1270) on the hearing website, and identified “successful” and alternative bidders on March 31, subject to court approval.
“After many months of uncertainty regarding the future of Dean Foods, we are pleased to announce that our bid to purchase a large portion of Dean’s assets has been approved,” said DFA executive vice president and chief of staff, Monica Massey. “The more than 13,000 dairy farmers who own our cooperative, and dairy farmers across the country, will now benefit from these milk markets remaining open.”
To see a list of facilities and other assets acquired by DFA and Prairie Farms, read: DFA ‘successful’ bidder on more than 40 Dean properties.
Prior to the April 3 hearing, attorneys representing Dean Foods, its creditors and potential buyers worked through some of the objections to the proposed sale. During the April 3 hearing in the U.S. Bankruptcy Court for the Southern District of Texas, Judge Jones worked through other objections.
While recognizing objections related to potential U.S. Department of Justice (DOJ) antitrust issues surrounding the sale of facilities to DFA, Judge Jones did not specifically address them. DFA’s bid was contingent upon approval by the DOJ, as well as finalization of collective bargaining agreements with multiple unions.
The Maryland and Virginia Milk Producers Cooperative, which had been identified as the alternate bidder on a Dean plant in High Point, North Carolina, had filed an objection citing potential delays in the transaction due to DOJ antitrust concerns. They were joined in the objection by California Dairies Inc.
Among its arguments, Maryland & Virginia Milk Producers Cooperative said the DFA bid for the North Carolina facility was “materially inferior” and gave DFA sole discretion to extend the closing date to Dec. 1, 2020. The Maryland & Virginia Milk Producers Cooperative bid included a closing date of April 20 and did not allow for an extension.
In the hearing on April 3, an attorney representing the Cooperative Regions of Organic Producer Pools (CROPP) sought clarification that a joint venture with Dean, OV Fresh, was not a salable asset during the bankruptcy proceedings.
“Throughout this process, our main focus has always been, and continues to be, on maintaining milk markets and limiting disruption to the industry,” Massey said. “If approved, the purchase of these assets will be critical to our mission of delivering value to our family farm-owners, preserve nearly 12,000 jobs and ensure fresh dairy is available to consumers across the country.” 
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Dave Natzke
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- Progressive Dairy
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