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Dairy Farmers of America agrees to buy 'substantial' part of Dean Foods for $425 million

Jessica Menton, USA TODAY

Dairy Farmers of America agreed to buy a “substantial” part of Dean Foods, the largest U.S. milk producer, for $425 million, the company said Monday. 

As part of the deal, Dairy Farmers of America, an agricultural cooperative that represents roughly 14,000 dairy producers, would acquire 44 of Dean’s plants. DFA agreed to assume some of Dean's liabilities.

Dallas-based Dean Foods filed for bankruptcy protection in November. Dean sells dairy products under labels including TruMoo, Pet, Friendly's, Tuscan and Land O'Lakes

“We have had a relationship with DFA over the past 20 years, and we are confident in their ability to succeed in the current market and serve our customers with the same commitment to quality and service they have come to expect,” Eric Beringause, president and chief executive officer at Dean Foods, said in a statement. 

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Dean Foods, which supplies supermarkets and schools, has struggled as the U.S. dairy industry grapples with declining milk consumption. The company's efforts to close plants and cut costs haven’t offset declining sales as more consumers turn to plant-based milk alternatives such as soy. Dean is not alone in seeking court protection to survive. Borden Dairy, among the largest and oldest producers in the USA, filed for Chapter 11 bankruptcy in January after more than 160 years in business.

Dean faced declines in sales of fluid milk, a key business for the company. About 3.7 billion pounds of packaged fluid milk products were shipped in November, a 9.4% drop from a year earlier, according to the U.S. Department of Agriculture. 

The deal requires the approval of the bankruptcy court and the U.S. Department of Justice. 

“As Dean is the largest dairy processor in the country and a significant customer of DFA, it is important to ensure continued secure markets for our members’ milk and minimal disruption to the U.S. dairy industry,” Rick Smith, president and chief executive officer at DFA, said in a statement. 

This article originally appeared on USA TODAY: Dean Foods bankruptcy: DFA to buy 'substantial' assets for $425M