US government approves €11bn milk merger
U.S. dairy, Suiza Foods Corp. to acquire rival Dean Foods Co. after
the companies agreed to sell 11 of their U.S. dairy plants.
The US Justice Department on Tuesday approved plans by the largest U.S. dairy, Suiza Foods Corp. to acquire rival Dean Foods Co. after the companies agreed to sell 11 of their U.S. dairy plants.
The department's antitrust division said 11 of the companies' dairy plants will be sold to a newly formed partnership called Dairy Holdings LP, which is half-owned by the Dairy Farmers of America Inc. farmer cooperative.
Suiza agreed to buy Dean, its largest U.S. competitor, in April, creating a company with about $10 billion (€11bn) in annual revenue.
Dallas-based Suiza owns and operates 67 dairy processing plants in 29 states and had net sales of about $5.76 billion (€6.39bn), the department said. Dean, based in Franklin Park, Illinois, owns and operates 43 dairy processing plants in 19 states, with net sales of about $4.4 billion (€4.8bn).
The dairy plants to be divested are located in Alabama, Florida, Indiana, Kentucky, Ohio, South Carolina, Virginia and Utah, the department said.
The companies said they plan to complete the merger before the end of the year.
As originally proposed, the Justice Department said, the merger would have hobbled competition in markets for milk sold through schools and retail outlets in those areas.
In many school districts, the department said, Suiza and Dean are currently "the only two, or two of just three, companies that bid to deliver milk to schools.''
The companies also agreed to modify Suiza's supply contract with the Dairy Farmers of America cooperative "to ensure that dairies owned by the merged firm in the areas affected by the divestitures will be free to buy their milk from sources other than DFA,'' the department said.
Despite the concessions, the decision to approve the merger provoked criticism from the chairman of the Senate Judiciary Committee, Sen. Patrick Leahy, of Vermont.
"Concentration in the agricultural processing sectors is emerging as a major blight on both farmers and consumers, and Suiza is Exhibit A,'' said Leahy, whose state is home to large numbers of dairy farmers.
The terms accepted by the department "will do nothing to forestall the emerging 'Suizopoly' that threatens to control both the purchase of milk from farmers and the sale of milk to consumers,'' Leahy said.
