Food & Agriculture Quarterly June 2020 - Page 15

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 PAGE 15