What does this mean? Their website shows that they are in charge of a lot of companies included Borden. Does this mean that we could turn it to borden? Or will be be assimilated into the multiple companies that they're in charge of? Thoughts, comments. concerns
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Every grocery store in the U.S. still has a dairy section that sells milk and I don’t think that will change in our lifetimes and someone has to provide those stores with milk. Walmart sells milk as a loss leader- prices it low because it’s a product people expect. I’m sure Walmart has data that says some people come to Walmart because of the price of their milk and when buying milk they almost always buy a bunch of other stuff that Walmart makes money on. Walmart opening a dairy was a response to Meijer opening their own which was a response to Kroger having their own dairies for decades. If Walmart is breaking even or even losing money with their dairy but losing less than they were when they were buying most of their private label from Dean Foods, then I could see them buying a Dean Foods plant or two or three. Same with Meijer.
Anti-trust issues aside, the whole declaring Chapter 11 and announcing that a DFA deal was in the works was an attempted con job by the new CEO /Leadership Team and DFA and the banks. CEO Leadership Team would get their millions (still will not matter what the final outcome), DFA would buy their biggest customer (the loss of Dean Foods would be a big blow to their dairy farmer owners), and DFA would pay just enough to cover what Dean Foods owes the banks, leaving nothing for the bond holders, the pension funds, all the other debtors, and the Wall Street shareholders. Bond holder group saw it immediately for what it was and is fighting so that things get sold for enough money that their bonds don’t become worthless. DFA buying everything might be best for employees as they have an interest in processing milk and if company sold in bits and pieces some locations likely not going to continue in the milk business, but can’t blame the bond holders for not wanting to get screwed.
Don't buy the media and company line that declining consumption was the cause of Dean Foods decline. Our loss of production capabilities due to all the closings far exceeded the decline in consumption. Lots of factors led to Dean Foods downfall, but Ralph excelerating things greatly with decision after decision that that lost us customers.
I wonder who the other buyers could be if DFA can't buy due to monopoly? It could end up that DFA could buy some of the company and walmert could buy some as well. Walmart pretty much owns the north side of the states with milk production after building that plant. The way walmart is, it only makes sense that they could try to get footing in texas and the southern states. I am still trying to figure out why walmart wanted in the milk business to begin with. milk sales are declining every year.
Thank you for explaining this, please keep doing this.
Antitrust laws will come in play
DFA is a co-op owned by members who are all dairy farmers. They are not a publicly traded company like Dean Foods.
At least here, the brand name they are best known for is Kemps. Borden is a brand names Kemps also uses for some products. Just like Dean Foods, DFA owns and licenses a number of brand names. If they buy Dean Foods, that sale might also include some or all of the brand names that Dean Foods owns.
The reason DFA and other companies were not willing to buy Dean Foods before bankruptcy is because buying the entire company would have meant that in addition to buying the assets (plants, property, trucks, and equipment), they also would have been responsible for paying Dean Foods debts (loans and pension liability being the big two). Now that Dean Foods has filed for bankruptcy, a company like DFA can buy just the assets and not be responsible for paying Dean Foods’ debts. It also means that unions will have to negotiate contracts with the new owner and the new owner is not likely to agree to any agreements that include under-funded pension plans.
So if DFA buys the plant where you work, you might automatically be offered a job with DFA or you might have to apply and be hired or DFA (or any other buyer) could close the plant and move production elsewhere.
In bankruptcy court yesterday, a group of bondholders opposed Dean Foods selling to DFA. Those bondholders first want all Dean Foods assets to be put up for sale to all bidders in order to get the most money for those assets. It could end up that the Dean Foods gets totally broken up and parts sold to different companies. And there is a concern that if DFA agrees to purchase Dean Foods that the Department of Justice will not allow the sales because DFA would be too big and have a monopoly in some regions.
So summary is that everything is business as usual at Dean Foods right now. Plants are likely going to be sold to new owners and that will result in change, but it’s likely going to be months and months before anything is finalized.