September 25

DFA, Dean Foods reach initial $425 million ‘stalking horse’ agreement

first_imgDairy Farmers of America (DFA) and Dean Foods announced an agreement for the farmer-owned cooperative to acquire a substantial portion of Dean’s assets and business for a base purchase price of $425 million. Under the agreement, announced Feb. 17, DFA becomes the “stalking horse bidder” to acquire 44 of Dean’s facilities and associated direct store delivery system, as well as certain corporate and other assets and functions. DFA will also assume various Dean liabilities.advertisementadvertisementAccording to a simple legal definition, a stalking horse bid is an initial bid on the assets of a bankrupt company. The bankrupt company can choose the stalking horse bidder, which sets the low bar for any other bids.What’s next? On March 12, the court is scheduled to consider a motion to allow DFA to serve as the stalking horse bidder. Until the court makes final approval of the DFA offer, and for a designated time after the motion is approved, other companies can submit purchase plans or competing offers.The deadline for interested parties to furnish information to be considered a potential competing bidder for any or all assets identified in the DFA-Dean agreement (see below), or to be considered a potential bidder for assets not part of the agreement (also below), is currently scheduled for March 31.The deadline for potential bidders to submit qualified competing bids for either assets covered under the agreement, or those outside the agreement, is April 13.If there are competing bids, an auction would be held sometime in April. A hearing to approve the sale would be held April 27.advertisementDean fluid milk brands DairyPure and TruMoo (flavored milk) are part of the purchase agreement, as is Steve’s ice cream. In a separate document provided by Dean, the DFA proposal would include Dean’s Mexican subsidiaries and its ownership interest in OV Fresh, a distribution joint venture with organic dairy cooperative Organic Valley.As part of the agreement, Dean committed to pay DFA a $15 million “breakup fee” if Dean ends up accepting a rival proposal.Dean facilities identifiedDean operates 57 plants in 31 states. The 44 facilities and locations included in the DFA-Dean asset purchase agreement include:Alabama: Homewood/Birmingham (Ice cream)California: City of Industry (2 plants)Colorado: Englewood and GreeleyFlorida: Deland and OrlandoIdaho: BoiseIllinois: Belvidere, Harvard and RockfordIndiana: Decatur and HuntingtonIowa: Le MarsMassachusetts: Franklin and WilbrahamMichigan: Grand Rapids and MarquetteMontana: Billings and Great FallsNevada: North Las VegasNew Jersey: FlorenceNew Mexico: AlbuquerqueNew York: RensselaerNorth Carolina: High Point and Winston SalemOhio: Springfield and ToledoPennsylvania: Lansdale, Lebanon, Schuylkill Haven and SharpsvilleSouth Carolina: SpartanburgTennessee: Athens and Nashville (2 plants)Texas: Dallas, El Paso, Houston, Lubbock and San AntonioUtah: Salt Lake City and St. GeorgeWisconsin: AshwaubenonDean Foods said it was working to find buyers for plants not covered under the agreement. Those facilities and locations are:Alabama: Homewood/Birmingham (fluid)California: Hayward, CAFlorida: MiamiHawaii: Hilo and HonoluluIllinois: O’FallonKentucky: Louisville (depot)Louisiana: HammondMichigan: Livonia (depot)Minnesota: WoodburyNorth Dakota: BismarckNevada: RenoOhio: Akron (depot) and MariettaOklahoma: TulsaSouth Dakota: Sioux FallsThe two parties have been working to reach an agreement since DFA became aware of Dean’s plan to initiate voluntary Chapter 11 reorganization proceedings. Dallas-based Dean announced the filing on Nov. 12, 2019, in the U.S. District and Bankruptcy Court in the Southern District of Texas.Read: Dean Foods files Chapter 11 bankruptcy, negotiating with DFAadvertisement“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,” said Rick Smith, president and CEO. “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.”“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 Eric Beringause, Dean Foods president and CEO.Once the sale order is entered and closing conditions are satisfied, including Department of Justice (DOJ) approval, the transaction would be closed.In late January, Monica Massey, DFA’s executive vice president and chief of staff, said the co-op was already in conversation with DOJ investigators regarding the Dean purchase.“We will fully cooperate with DOJ officials, as we have done with past transactions,” she said.Dean estimated the process could take three to six months. In the meantime, Dean and DFA will remain separate, standalone organizations, and Dean will continue day-to-day operations as usual under existing contracts.Read: Dean Foods receives court approval for $850 million in financingCurrent milk suppliers would not have to become DFA members, a Dean document said.For additional information, visit Dean Foods’ restructuring website.Court filings and claims information are also available on a website administered by Epiq Corporate Restructuring. Dave NatzkeEditorProgressive DairyEmail Dave [email protected]last_img

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Posted September 25, 2020 by admin in category "yqyurabmf

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