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DOJ requiring divestitures for Dean Foods asset sales

DFA required to divest three processing plants; Prairie Farms transaction approved.

The Department of Justice (DOJ) has concluded its investigation into proposed acquisitions by Dairy Farmers of America Inc. (DFA) and Prairie Farms Dairy Inc. (Prairie Farms) of fluid milk processing plants from Dean Foods Company (Dean) out of bankruptcy. 

The department’s Antitrust Division, along with the offices of the Massachusetts and Wisconsin attorneys general (Plaintiff States), filed a civil antitrust lawsuit May 1 in the U.S. District Court for the Northern District of Illinois to block DFA’s proposed acquisition of three fluid milk processing plants from Dean, which are located in northeastern Illinois, Wisconsin, and New England.  However, the DOJ also filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. In order for approval, DFA would have to divest its plants located in in Harvard, Illinois; De Pere, Wisconsin; and Franklin, Massachusetts, as well as associated equipment and other assets related to fluid milk production, to an approved acquirer or acquirers. 

“We are pleased to announce that our transaction to acquire a substantial portion of Dean Foods’ assets has officially closed,” said Monica Massey, executive vice president and chief of staff of DFA, adding that DFA will pay $433 million to acquire 44 of Dean’s facilities as well as certain corporate functions.

The coop also relayed that as part of the agreement with the DOJ, it will divest the three processing plants.

“After months of uncertainty regarding the future of these facilities, this transaction will secure milk markets for dairy farmers and ensure nearly 11,000 jobs in communities across the country,” Massey said. “As a cooperative founded, owned and governed by family farmers, the finalization of this agreement is important to our commitment to protecting and preserving family dairy farms for generations to come.”

During its investigation, the department also expressed concerns to DFA and Dean about the potential loss of competition if DFA were to acquire a number of Dean’s fluid milk processing plants in the Upper Midwest. As a result, DFA subsequently ceased its efforts to acquire those plants.

DOJ said the settlement with DFA and Dean will ensure the continued operation of dozens of fluid milk plants and that supermarkets, schools, convenience stores, hospitals, and other consumers of fluid milk are not harmed by the loss of Dean’s processing plants due to its bankruptcy.

Prairie Farms sale approved

DOJ also announced the closing of its investigation into Prairie Farms’ proposed acquisition of fluid milk processing plants from Dean in the South and Midwest, concluding that the plants at issue likely would be shut down if not purchased by Prairie Farms because of Dean’s distressed financial condition and the lack of alternate operators who could timely buy the plants.

“This is a tumultuous time for the dairy industry, with the two largest fluid milk processors, Dean and Borden Dairy Company, in bankruptcy, and a pandemic causing demand for milk by schools and restaurants to collapse.  In the face of these challenges and Dean’s worsening financial condition, the department conducted a fast but comprehensive investigation, and our actions today preserve competition for fluid milk processing in northeastern Illinois, Wisconsin, and in New England,” said assistant attorney general Makan Delrahim of the Antitrust Division.  “In addition, the closing of the department’s investigation into Prairie Farms’ acquisition will preserve necessary outlets for dairy farmers and keep milk on consumers’ refrigerator shelves by keeping the plants in operation.”

Prairie Farms purchased eight milk plants and three distribution centers.

"This significant acquisition aligns well with our strategy to grow the Prairie Farms’ brand and expand our footprint of best-in-class plants into several new states," said Ed Mullins, Prairie Farms' Chief Executive Officer/Executive Vice President. "We are looking forward to extending the availability of our award-winning dairy products to new customers."

 

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