FOOD & AGRICULTURE QUARTERLY | JUNE 2020
Dean Foods’ deal with Dairy
Farmers of America: Where
bankruptcy and antitrust meet
JASON DUBNER
Dean Foods, founded in 1925 and once one of
America’s largest fluid milk processors employing
roughly 15,000 people nationwide, is now nearing its
end. Changing consumer preference toward nondairy
or private label milk, international tariffs and generally
falling dairy prices all contributed to Dean’s decision
last fall to voluntarily initiate bankruptcy proceedings.
And since filing for Chapter 11 protection in November
2019, Dean’s financial condition only worsened,
compounded by the coronavirus pandemic that has
further diminished the demand for milk with the
ongoing closure of schools and restaurants.
In support of Dean’s reorganization goal to ultimately
effect an orderly and efficient sale of the company,
Dean announced in February 2020 that it had entered
into an asset purchase agreement (APA) with Dairy
Farmers of America (DFA), the largest cooperative
of dairy farmers in the country, as well as a vertically
integrated competitor of Dean in the fluid milk
processing market. Under the APA, DFA would
potentially acquire a substantial portion of Dean’s
business operations, including 44 of Dean’s 57 fluid milk
plants around the country. Because Dean’s agreement
with DFA occurred in the midst of Dean’s pending
reorganization, the transaction was subject to approval
by both antitrust regulators and the federal bankruptcy
court. Less than three months later, however, Dean
obtained that approval from both sources, subject to
the divestiture of three of the 44 fluid milk processing
plants that DFA had originally agreed to buy.
The Bankruptcy Court First Provides Its Order of
Approval
Under the supervision and procedures of the
Bankruptcy Court for the Southern District of Texas,
following Dean’s execution of the APA with DFA in
February 2020, the deal encountered objections from
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