DALLAS — Leading food and beverage company Dean Foods Co. has filed for Chapter 11 bankruptcy and plans to sell the company.
The Dallas-based business is in “advanced discussions” with Dairy Farmers of America Inc. regarding a potential sale, according to a statement from Dean Foods.
Dean Foods, the nation’s largest processor and direct-to-store distributor of fluid milk, has about 15,000 employees and is known for brands such as Land O’Lakes, DairyPure and TruMoo.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” said Eric Beringause, Dean Foods’ president and CEO. “Importantly, we are continuing to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting our dairy suppliers and other partners."
Milk is the category that has been the most affected by the rise of plant-based foods, according to Chicago-based retail market research firm IRI. Fewer than 1 in 5 Americans said they are drinking less dairy milk because of health concerns, according to IRI. Popular substitutes include almond, coconut and soy milks, along with flax, quinoa and oat milks.
Dairy Farmers of America is a milk marketing cooperative and dairy foods processor with more than 14,500 farmer-members, according to its website. If Dean and Dairy Farmers of America enter a sales agreement, all assets of the company would be sold and the transaction would be subject to regulatory approval and higher offers in the bankruptcy, the statement said.
Dean Foods has received a commitment of about $850 million in debtor-in-possession financing from its existing lenders. It plans to use that financing, along with cash on hand and operating cash flows, to support its continued operation throughout this process, including payment of employee wages and benefits and payments to suppliers and vendors.
Beringause, who was hired about three months ago, said the company is taking the best path forward.
“In recent months, we have put in place a new senior management team that not only has considerable experience in the dairy and consumer product industries but also in executing major turnarounds,” he said. “I am confident we have the right people in place to lead us through this process.”