Dean Foods, the nation's largest milk processor, has filed for Chapter 11 bankruptcy protection, blaming low dairy prices and the associated decline in consumer demand for dairy products.
"Dean and dairy farmers for years have grappled with consumers’ decades-long move away from traditional cow’s milk, as beverage sales shift toward bottled water, fruit juices and milk alternatives made from soy and oats," Jacob Bunge reports for The Wall Street Journal. "Within the milk business, Dallas-based Dean’s brands have struggled as grocery chains push low-price store brands and in some cases build their own milk plants, reducing their reliance on Dean. A recent jump in milk prices, up 10 percent over the past three months, boosted costs while Dean has worked to close plants and reduce expenses.
"Dean and dairy farmers for years have grappled with consumers’ decades-long move away from traditional cow’s milk, as beverage sales shift toward bottled water, fruit juices and milk alternatives made from soy and oats," Jacob Bunge reports for The Wall Street Journal. "Within the milk business, Dallas-based Dean’s brands have struggled as grocery chains push low-price store brands and in some cases build their own milk plants, reducing their reliance on Dean. A recent jump in milk prices, up 10 percent over the past three months, boosted costs while Dean has worked to close plants and reduce expenses.
Though Dean has cut its workforce and closed under-performing plants in recent years to stay solvent, it lost several major customers as big retailers like Kroger and Walmart opened their own plants to supply store-brand milk. "Dean had reported five straight quarterly losses, and some analysts anticipated the company would continue losing money throughout 2020," Bunge reports. "The company’s 2018 sales of $7.8 billion were down 38% from a decade ago, and its shares have been trading around $1 since May, down from above $21 at the end of 2016."
Dean, which has about 15,000 employees, has secured funding to continue operating during the debt restructure, and says it's in "advanced discussions" to sell most or all of its assets to Dairy Farmers of America, the nation's largest dairy cooperative. Dean is DFA's biggest customer and owes the cooperative nearly $173 million, Nathan Bomey reports for USA Today.
A deal between DFA and Dean could entail a lengthy process with an antitrust review, and other buyers could emerge, Lydia Mulvany and Katherine Doherty report for Bloomberg.
A deal between DFA and Dean could entail a lengthy process with an antitrust review, and other buyers could emerge, Lydia Mulvany and Katherine Doherty report for Bloomberg.
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