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June 16, 2020

Former Dean Foods CEO, Investment Group Likely to Purchase Borden Foods

 |  By: Anna-Lisa Laca

Borden Foods, best known for their mascot Elsie, filed Chapter 11 bankruptcy in January citing the need to restructure debt in order to stay viable in the current market. This week, court documents show an investment group called New Dairy Opco LLC, comprised of KKR & Co. and Capitol Peak Parters, will purchase all of Borden’s assets if approved by the bankruptcy court on Thursday.  

Private equity giant KKR bought Borden in 1995 for $2 billion and made it private after 68 years as a publicly traded company, Dallas News reports. The firm later sold off divisions and brands to various companies, but remained a lender for Borden’s $175 million term loan, according to court records.

Capitol Peak Partners is also no stranger to the dairy business. In fact, its founder, Gregg Engles, is a former CEO of Dean Foods. 

In an interview last month, Borden CEO Tony Sarsam told the Dallas Morning News that the company had pursued merging with Dean Foods during their bankruptcy and acquisition by Dairy Farmers of America, Prairie Farms Dairy and others, but it “came too late in their process.”

Like many other dairy companies, Borden saw a 25% drop in production during April and May due to the coronavirus shutting down schools and restaurants, which together represent about one-third of its business. However, recently the company won a contract for the Farmers to Families Food Box program to deliver 700 million servings of fresh fluid milk to nonprofits over about six to seven months. Sarsam said the contract was a “meaningful amount of volume and revenue” for the company.

He expects the entire bankruptcy process to be complete by the end of June.