Dean Foods explores sale of Morningstar division

Dean Foods Co yesterday said that it is exploring a sale of its warehouse business division Morningstar – a deal which may fetch the US food and beverage company around $1 billion.

Dallas, Texas-based Dean Foods, which operates three divisions - Fresh Dairy Direct, WhiteWave and Morningstar - said, ''The company recently decided to explore a transaction that may result in the sale of the Morningstar business.

''The company has not yet identified a buyer for Morningstar, but believes the business possesses an attractive portfolio in a growing marketplace and a top-notch management team. The company only intends to sell the Morningstar business if it can do so in a transaction that maximizes shareholder value and helps ensure the future success of the business,'' it added.

Dean Foods has hired investment bank Evercore Partners to find potential buyers and Reuters, citing people familiar with the matter said before the company made its announcement, reported that mainly private equity firms have shown interest,

Morningstar is a leading warehouse delivery dairy business that produces and sells traditional and specialty items, including cultured dairy products, ice cream mixes, coffee creamers, aerosol whipped toppings, traditional and value-added milks, and blended iced beverages to retailers and foodservice providers nationwide.

Morningstar generated sales of $1.3 billion in 2011, or 10 per cent of Dean Foods' total revenue of $13.05 billion.