The sale of Dean Foods’ assets will continue without Dairy Farmers of America as the preferred bidder.
In a March 18 bankruptcy court filing in Texas, Dean asked for the adjustment to avoid legal wrangling over procedure.
The beleaguered milk processor announced last month that DFA would serve as the stalking horse bidder, which sets the price floor, in the auction of 44 Dean plants across the country.
A purchase by DFA was already in the works when Dean Foods filed for Chapter 11 bankruptcy protection in November. The two entities have a longstanding business relationship.
Dean Foods Vice President Anne Divjak said she still expects the national cooperative will submit a bid by the court-imposed March 30 deadline.
DFA said it has agreed to the new bid procedures and is re-evaluating its options.
“We believe any bid we submit will benefit all dairy farmers, as no one has a greater interest in preserving milk markets than we do,” said Monica Massey, the cooperative’s executive vice president and chief of staff.
Comprising most of the company’s processing locations, the plants DFA would have bought include those in Franklin and Wilbraham, Massachusetts; Florence, New Jersey; Rensselaer, New York; Springfield and Toledo, Ohio; and Lansdale, Lebanon, Schuylkill Haven and Sharpsville, Pennsylvania.
Dean’s plant in Marietta, Ohio, and depot in Akron, Ohio, were not included in the agreement.
Maryland & Virginia Milk Producers Cooperative Association was one of several entities that objected to giving DFA the inside track.
The regional co-op said the process failed to address antitrust concerns and put bidders other than DFA at a disadvantage.
More objections came from a group of farmer activists, who said DFA was a bad actor that worked against its members’ best interest.
“DFA murdered Dean. Granted Dean should not have been hanging around with mobsters,” their friend of the court brief says in a particularly venomous passage. “Based on our observations of this Courts’ behavior, it appears to be prepared to reward the murderer with the victim’s house, car, boat and bank account.”
The signatories include Mike Eby, a Pennsylvania farmer who is president of a company that is suing DFA; Arden Tewksbury, president of the Progressive Agriculture Organization; Dieter Krieg, publisher of dairy outlet Farmshine; and current and former dairy farmers from the Northeast.
In 2016, DFA agreed to pay $50 million to settle a class-action lawsuit claiming that the co-op, its marketing arm Dairy Marketing Services and Dean Foods worked together to dominate the raw milk market in the Northeast.
Eby is part of a group that rejected that settlement and is seeking greater damages.
Dean Foods settled its part of the litigation in 2011 for $30 million.
In a statement responding to the activists’ criticism, DFA said that its goals in seeking to purchase the Dean plants are to preserve dairy farmers and limit disruption in the industry.
“Our farm families have a vested interest in these plants continuing to process dairy farmers’ milk, rather than be shuttered or converted to some nondairy use,” Massey said.
For Dean Foods’ part, Divjak pointed in part to a March 12 court document saying objectors to the original bidding process had baselessly maligned the management of the company.
This document does not specifically address the activists’ brief, which had been filed just the day before.
Divjak also said Dean Foods had received broad support for the modified bidding process.