Dairy Farmers of America (DFA) has agreed to purchase a significant part of Dean Foods for $425m in a stalking horse bid.

It will buy Dean Foods’ 44 facilities, as well as other assets.

As an agricultural cooperative, DFA represents around 14,000 dairy producers. It has also agreed to assume some liabilities of Dean Foods.

The two companies have been in negotiations since Dean Foods announced it would begin voluntary Chapter 11 reorganisation.

based in Dallas, Texas, Dean Foods is a major food and beverage supplier in the US. Its portfolio includes Alta Dena, Berkeley Farms, Country Fresh, as well as milk brands, such as DairyPure and TruMoo.

It also manufactures and distributes ice cream, cultured products, juices, teas and bottled water.

DFA president and CEO Rick Smith said: “As Dean is the largest dairy processor in the country and a significant customer of DFA, it is important to ensure continued secure markets for our members’ milk and minimal disruption to the US dairy industry.

“As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA. We are pleased that we have come to an agreement on a deal that we believe is fair for both parties.”

The bankruptcy court overseeing Dean Foods’ Chapter 11 reorganisation and the US Department of Justice must approve the transaction.

Latham & Watkins, Bryan Cave Leighton Paisner and Houlihan Lokey advised DFA.

In December 2018, DFA entered an agreement with North American dairy cooperative Agropur to acquire its facility in St Paul, Minnesota.