Top US milk processor Dean Foods Company filed for Chapter 11 bankruptcy and is in advanced talks with Dairy Farmers of America about a potential sale.
Dean listed assets and liabilities of as much as $10 billion each in court papers filed in Houston, and said in a statement it has commitments for $850 million in bankruptcy financing from existing lenders led by Rabobank. The filing allows Dean to keep operating while it works on a plan to pay creditors and turn the business around.
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Losses have piled up after Dean's biggest customer, Walmart, built its own milk plant. The company has been squeezed by fierce competition and the rising price of milk, which has increased costs and eroded profit margins.
Americans are drinking less cow milk, with nut milks and even bottled water cutting into its popularity. On top of that, retailers have been selling their house brands of milk at a loss to increase store traffic, Hoai Ngo of Bloomberg Intelligence wrote in a note.