Dean Foods (NYSE: DF), the nation’s biggest milk producer, has filed for Chapter 11 bankruptcy protection to reorganize its debt and help fund pensions while it looks to sell the company. The company said substantially all of its subsidiaries were part of the proceeding, which has been filed in the Southern District of Texas. Dean said it will continue operating normally while it puts its finances in order.
The 94-year-old company, which has a market valuation of about $74 million, supplies milk for its own brands, including Dairy Pure, Meadow Gold, and TruMoo, as well as store brands. It employs 16,000 people and operates 60 processing facilities across the country. The company says it had a net debt of about $968 million at the end of June.
Dean Foods has struggled in recent years because Americans are drinking less cows milk. Since 1975, the amount of liquid milk consumed per capita in the U.S. has fallen by more than 40 percent. Sales for cow’s milk has been declining for the past four years. The reduction has had an outsize effect on Dean Foods, which derived 67 percent of its sales from fluid milk last year, according to its annual report.
The company has lost money in eight of its last 10 quarters and posted declining sales in seven of the last eight. Dean’s sales tumbled 7 percent in the first half of the year, and profit fell 14 percent. CEO Eric Berigause said in a statement, “Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption.”
Earlier this year, the company explored options, including a sale, but ended that review in September. Now, the Dallas company says it may sell itself to the Dairy Farmers of America, a marketing cooperative owned by thousands of farmers.
