Le Mars, Iowa — Dean Foods Company has announced that it and certain of its subsidiaries have entered into an asset purchase agreement with Dairy Farmers of America through which they will acquire a substantial portion of Dean Foods’ business operations — but for now, they are open to better offers.
Dean Foods says that pursuant to the agreement if consummated, Dairy Farmers of America will acquire 44 of the Company’s fluid and frozen facilities and the real estate, inventory, equipment, and all other assets necessary to operate such facilities. The agreement includes the Le Mars plant.
Dean Foods has several brands, including Dairy Pure, TruMoo, and Land O’Lakes. Wells Dairy sold its fluid milk and cultured dairy division to Dean Foods in 2007 and 2008, including the Le Mars plant. (Wells retained their ice cream and frozen treat division, and sells those products under the Blue Bunny and several other names.)
Since it involves a bankruptcy, the situation is a little more complicated than Dean just selling their assets to Dairy Farmers of America.
According to a press release, if approved by the Bankruptcy Court at a hearing scheduled for March 12th, Dairy Farmers of America will serve as a “stalking horse bidder” for those assets in a court-supervised sales process, whereby the agreement with DFA will set the floor for the sale of the Stalking Horse Assets.
A “stalking horse bid” is an initial bid on the assets of a bankrupt company, setting the low-end bidding bar so that other bidders can’t underbid the purchase price.
Accordingly, the release goes on to say that the proposed agreement is subject to higher or otherwise better offers, and “the Company looks forward to working with its bondholders and other potentially interested parties in connection with their bids.”
Eric Beringause, President and Chief Executive Officer of Dean Foods says, “I would like to thank all Dean Foods employees for their continued commitment to our customers, our partners and our company throughout this process. Their efforts have enabled us to continue providing an uninterrupted supply of high-quality dairy products, as well as support our dairy suppliers, vendors, and other partners as we work to determine the best path forward for our business.”
Additional information is available on the restructuring page of the Company’s website, DeanFoodsRestructuring.com.
The Dean Foods/Land O’Lakes plant on Russell Street in Sioux Falls is NOT part of the purchase agreement, and according to Dean Foods, they are looking for buyers for that plant and others not covered in the agreement.
