DOJ Set To Approve Mega Dairy Deal

The Justice Department antitrust officials are nearing a settlement with a major U.S. dairy-farming cooperative that would allow it to buy dozens of plants from bankrupt milk processor Dean Foods reported the Wall Street Journal. 

The settlement with Dairy Farmers of America, which could be announced soon, would require the cooperative to shed some assets as a condition of government approval for the Dean Foods purchase, the people said. Details of the settlement couldn’t immediately be learned.

Dallas-based Dean Foods, the top US milk processor by sales, sought chapter 11 protectionin November after struggling for years with slumping milk demand as consumers flock to other beverages, including milk alternatives made from soy and oats. The decline has caused a shift in milk production to a small number of larger plants.

Dean’s brands include DairyPure, Land-O-Lakes and TruMoo.

DFA, based in Kansas City,  is the biggest US dairy cooperative by membership. It has been pursuing the bulk of Dean’s assets for months. Dean said on March 31 that DFA had won a bankruptcy auction with a $433 million bid to purchase 44 fluid- and frozen-dairy processing facilities.

A federal bankruptcy judge approved the purchase this month, but it still needs antitrust clearance from the Justice Department, which for months has been considering how a Dean-DFA deal would affect milk prices and competition in the dairy business.

“As part of our purchase agreement with Dean Foods, we have committed to the potential divestiture of some Dean Food facilities in response to feedback received from DOJ during the course of their review of this transaction,” said Monica Massey, DFA executive vice president and chief of staff. “We believe we will finalize an agreement with DOJ and close on this transaction as anticipated.”

A Dean spokeswoman referred to a recent press release in which the company said it anticipated completing the sale in early May. A Justice Department spokesman declined to comment.

Some farm groups have objected to the deal, saying it could lead to an excessive concentration of milk buyers in parts of the country.