Deal between DFA and Dean Foods finally closes

After much wrangling, the deal between Dean Foods and Dairy Farmers of America, America's largest dairy cooperative, appears to be finally closed. The cooperative had to dig deeper into its pockets for this. The $425 million bid that was rejected in March proved insufficient.

Last February it was announced that takeover of bankrupt Dean Foods was completed by dairy cooperative Dairy Farmers of America (DFA). DFA would pay $425 million for 44 of Dean Foods' facilities. In mid-March, however, it was announced that the deal had been abandoned. The company was then offered through a public auction, which ended on March 30.

New offer
The possibilities were re-evaluated within DFA, after which the dairy cooperative made a new offer of $433 million. This offer related to the same 44 facilities of Dean Foods. The hearing to request the grantee's approval is scheduled for April 3. If everything is accepted, the transactions will be completed around the end of April.

With this offer, America's largest dairy cooperative takes over the largest share in Dean Foods. Prairie Farms Dairy comes in second, the dairy processor to buy a share for $75 million. The remainder is distributed among several other American dairy processors.

Uncertainty around DFA
It's a striking twist in DFA's story, as they summoned some of the largest member dairy farmers in Wisconsin on Tuesday night (US time). wash away large amounts of milk† The reason for this was that there was more milk available than could be processed. In addition, there was a declining demand for milk, partly because the food sector is flat.

There are also stories that DFA is in dire straits. Members of the cooperative's dairy farmers are therefore afraid of what is to come. They do not fully support DFA's choice. With the purchase of Dean Foods, the dairy farmers are afraid that the loss of competition means that there will be even more pressure on the (already low) prices. However, DFA has indicated that this will actually offer opportunities.

Jorine Cosse

Editor at Boerenbusiness who studies the dairy, pig (meat) and feed markets. Jorine analyzes the roughage market on a weekly basis and periodically the compound feed market.

j.cosse@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.