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US milk industry merger nears completion with a $425 million agreement

18 February 2020

Dairy Farmers of America will acquire the assets of bankrupt milk processing firm Dean Foods if regulators get on board.

According to reporting from the New York Times, Dairy Farmers of America, the country’s largest farmer-owned milk cooperative, announced on 17 February that it had agreed to purchase a “substantial portion” of bankrupt milk company Dean Foods.

Under the agreement, Dairy Farmers of America would pay $425 million to acquire 44 of Dean Food’s facilities along with the real estate, inventory and equipment needed to operate them. In order to move forward, the deal must be approved by the bankruptcy court overseeing Dean Foods. It will also need approval from US regulators who have been investigating the potential merger.

American dairy farmers face significant challenges in the coming year. Milk consumption in the US is declining and the trade war with China has pushed thousands of farms out of business. This potential merger could consolidate an already competitive industry, crippling farmers who are already struggling.

According to the analysis in the New York Times, the deal will likely draw scrutiny from anti-trust regulators as the merger would reduce competition and suppress the price of raw milk. Dairy Farmers of America, however, says that its deal will help farmers by guaranteeing consumers for their milk at a time when US consumption rates are declining.

Read the full story in the New York Times.


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