The past year has been rocky for the dairy industry as both Borden Dairy Co. and Dean Foods filed for bankruptcy protection within months of one another.
Dallas-based Borden operated 12 plants and produced nearly 500 million gallons of milk per year before it succumbed to reduced demand, as milk consumption has dropped 40% since 1975. Additionally, Borden reported that the closures of thousands of dairy farms in recent years has resulted in their remaining suppliers charging higher prices, resulting in a level of debt the company deemed "unsustainable."
Recent reports suggest that Borden was hoping to use the bankruptcy to restructure and continue operating, and it may be a tenable approach considering the parties who have submitted the winning bid for the company.
A joint venture between Capitol Peak Partners and KKR & Co. won the bankruptcy auction, though it's yet to be approved.
Capitol Peak was founded in 2017 by Gregg Engles, the former chairman and chief executive of rival Dean Foods. Partner in the private equity deal is KKR, who actually owned Borden for a number of years before selling certain brands and divisions and remaining a lender on its $175 million term loan. According to reports, KKR used what was owed on the loan as part of its bid.
According to Food Dive, both groups "are familiar with the struggles facing the dairy industry today so they likely know what they are getting into with this more than 150-year old brand."
