Stater Bros. Markets to sell Santee Dairies to Dean Foods
Stater Bros. Markets has ended a potential food fight, saying Monday that it would sell its Santee Dairies milk processing division to Dean Foods, owner of the Alta Dena and Horizon Organic brands.
Rival grocery chains were starting to refuse to buy the milk processor’s Knudsen brand and other products because they believed they were helping a competitor, leaving Santee with little opportunity for growth, said Jack Brown, chief executive and owner of Stater Bros. Holdings Inc., a 165-store supermarket company based in San Bernardino.
“It was the majors, Vons, Ralphs and Albertsons, but I understand. It makes sense and I would probably do it myself,” Brown said.
Santee, based in City of Industry, employs about 300 workers, has annual sales of $101 million and earned Stater an operating profit of $500,000 last year. No layoffs are expected, Brown said.
Brown declined to release the sale price. Dean Foods, which is based in Dallas, did not return calls.
Stater Bros. will continue to purchase about 40 million gallons of Santee milk, including its Knudsen Blue Ribbon brand, for sale to its customers.
The transaction is expected to be completed within the next few months, Brown said.
Severing the milk division from Stater Bros. should allow Santee to win a bigger share of the milk business in Southern California, Brown said. Dean Foods already does business with the other supermarket chains with its existing brands.
Stater Bros. and Hughes Family Markets bought equal shares of Santee in 1986 when the old Knudsen dairy business filed for bankruptcy protection. The Hughes half of the company eventually wound up in the hands of Kroger Co., owner of Ralphs, and Stater bought out Kroger in 2004.
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