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
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.