Dean Foods to Acquire Rest of Horizon Organic

Dean Foods Co., the biggest U.S. milk producer, agreed Monday to buy the 87% of Horizon Organic Holding Corp. it doesn’t already own for $216 million in cash to become the largest U.S. organic dairy company.

Dean Foods would pay $24 a share for Horizon and would assume about $40 million in debt. The offer is 27% higher than Horizon’s Friday closing price of $18.93. The transaction is expected to close by the end of the year and might add to earnings in 2004, Dean Foods said.

The purchase would allow Dallas-based Dean Foods to expand distribution of Horizon’s products, which include milk, orange juice and pudding, to all U.S. grocery stores, analysts said.

This would be the second acquisition since the company was formed when Suiza Food Corp. purchased the old Dean Foods and changed its name. Dean Foods bought soy milk maker White Wave in May 2002.

The acquisition “fills in a gap in Dean Foods’ product portfolio and offers significant growth opportunities,” Merrill Lynch analyst Leonard Teitelbaum wrote in a report.

Dean Foods shares rose 90 cents to $31.50 on the New York Stock Exchange. Horizon rose $4.90 to $23.83 on Nasdaq.

Horizon currently sells in only 62% of stores, Teitelbaum said. The $11-billion organic food industry is the fastest-growing part of the U.S. grocery business, Horizon has said.

Dean Foods already packages about 40% of Horizon’s products. Horizon would be folded into Dean Branded Products Group and remain in Boulder, Colo.