The court is expected to hold a hearing on the sale of Dean Foods assets on April 3. The deal was called off after objections from farmers and agriculture advocacy groups as well as members of DFA and Dean shareholders filed a legal document opposing the pending sale, citing concerns about prices, competition and antitrust issues.Documents state that the Texas-based dairy processor and DFA agreed to "mutually terminate" the $425 million asset purchase. One of America’s biggest dairy companies, Dean Foods, filed for Chapter 11 bankruptcy on Tuesday, leaving the future uncertain for its milk suppliers, some of whom don’t know whether they can stay in business if their major buyer goes belly up.
Last month, DFA President and CEO Rick Smith announced that it had entered into an asset purchase agreement with Dean through which DFA would serve as the stalking horse bidder in the court supervised sale. America’s biggest dairy co-op may buy Dean Foods. Bids may be submitted in the form of an asset purchase or a plan of reorganization. "The only question is where that value will be directed...DFA sees future profitability, which is why it wants Dean's assets. A Texas bankruptcy judge will decide if Dairy Farmers of America will be allowed to set the baseline for bidding in an auction of Dean Foods Co. assets. "While Dean shareholder Susan Poole says she is glad DFA is no longer the stalking horse bidder (which would set a minimum for the process), she's afraid potential bidders won't have enough financial information nor sufficient time to cast a bid.Poole says many stakeholders are opposed to DFA purchasing Dean Foods for many reasons.In 2007, southeastern dairy producers filed a class action lawsuit against Dean Foods and Dairy Farmers of America along with other companies for violating antitrust laws, according to court documents. Opponents fear a milk monopoly The New Food Economy by Jessica Fu. The companies settled the suit in excess of $300 million.Dairy farmer and attorney Joshua Haar filed a brief in the bankruptcy court, asking the judge to appoint an ad hoc group of equity shareholders to ensure that the interests of fellow shareholders are adequately represented.According to documents filed this week with the U.S. Bankruptcy Court in Houston, Dean Foods Company revealed that Dairy Farmers of America is no longer the lead bidder in the upcoming bankruptcy sale.Haar wrote that the assets (of Dean Foods) on the table generate over $5 billion in sales.Dean Foods is owned by and serves more than 14,500 dairy farmer-members representing more than 8,500 dairy farms in 48 states.Monica Massey, executive vice president and chief of staff for DFA says the company is re-evaluating its options under the new bidding procedure, but any bid DFA submits "will benefit all dairy farmers. Farmers supported by their communities, rather than corporations, receive better returns on their products and have more control over their farm management practices.After Dean’s bankruptcy announcement, Organic Valley CEO Bob Kirchoff reassured its suppliers. ""No one has a greater interest in preserving milk markets than we do," she said in a statement.Last month, DFA President and CEO Rick Smith announced that it had entered into an asset purchase agreement with Dean through which DFA would serve as the stalking horse bidder in the court supervised sale.While DFA professes a desire to preserve milk markets for their members, Poole says the sale is a bad deal for everyone involved.Poole believes that the March 30 sale deadline set by the U.S. Bankruptcy Court in Houston should be extended to also allow for the antitrust investigation by the DOJ to be completed. "Dean had over $1.26 in equity per share when they were forced into bankruptcy. Producers alleged that the companies created a monopoly in that part of the country which subsequently impacted milk prices. "According to a statement from Dean, that while DFA is no longer the stalking horse, the Kansas City-based cooperative is still expected to submit a bid for Dean's assets by the March 30 deadline.Many dairy producers and retailers for the bankrupt milk-processing giant Dean were alerted in late January that the U.S. Department of Justice had launched a federal investigation of DFA's potential acquisition of Dean and the potential impact it would have on prices and competition in the marketplace. Dean Foods bankrupcy update for March 30, 2020. "However, DFA wants to buy their assets quickly and cheaply, which doesn't give proper value to all the stakeholders: creditors, bondholders or shareholders. Kirchoff noted the cooperative had been aware that Dean was struggling, and he stated the bankruptcy will have “no impact on the venture’s customers or vendors.” This sounds like good news for the family-scale dairies that belong to the Organic Valley co-op.The news is less good for the remaining Dean Foods brand farmers.Get an unfiltered view from the fields, whether it’s an authentic organic farm or an industrial imposter.
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