California dairy giant Foster Farms Dairy has agreed to buy Humboldt Creamery‘s Fernbridge and Stockton, Calif. plants pending bankruptcy court approval or a higher bid.
The company is the largest privately owned dairy in the state, milking more than 5,000 cows a week at its five dairies. Foster Farms’ bid and plan to operate the company would have to be approved by the U.S. Bankruptcy Court judge overseeing the case.
Foster Farms was founded in 1939 and now has three processing plants and eight distribution facilities in California, employs about 650 people and does some $300 million in sales each year. It produces milk, juices, butter, ice cream, cottage cheese, sour cream and powdered milk.
The dairy business is separate from its sister business, also Foster Farms, which produces mostly poultry but has recently expanded into frozen Mexican foods.
Humboldt Creamery’s CEO Len Mayer said that the deal was struck after weeks of negotiations.
”This sale is a very good step for farmers, employees, customers, suppliers and the community at large,” Mayer said.
A call to Foster Farms Dairy wasn’t returned by deadline, but its Chief Financial Officer Tom Van Autreve said in a statement that the Modesto company was looking forward to expanding with Humboldt Creamery’s assets.
The creamery — to which about 40 dairies supply milk — filed for Chapter 11 protection in April, two months after its former CEO Rich Ghilarducci resigned and called attention to financial discrepancies in the company’s books. Since then, unsecured creditors’ inquiries into the creamery’s financial condition show its inventory and accounts payable and receivable were off by nearly $60 million as of December.
Humboldt Creamery intends to ask the court to approve the sale to Foster Farms Dairy — the so-called stalking horse bidder — or to the highest bidder at the hearing expected to be held on Aug. 11. The creamery expects the sale to be complete by Aug. 25.