Dean Foods Settles With Dairy Farmers

DALLAS ( TheStreet) -- Dean Foods ( DF) avoided an impending trial by reaching a settlement with Tennessee dairy farms over milk prices.

Dean said Wednesday it agreed to settle the class-action lawsuit by paying a total of $140 million over the next five years. The money will be paid into a fund available to the plaintiffs.

Dean will make an initial payment of $60 million following preliminary court approval, and will then make subsequent payments of $20 million on the anniversary of the approval date for the next four years.

The Tennessee federal court case had been scheduled for trial beginning in August.

"We believe this settlement is in the best interest of our shareholders, employees, customers and consumers," said CEO Gregg Engles. "Settling this case allows us to focus on the business challenges that we face, and to continue to take costs out of our operations while avoiding the expense, uncertainty and distraction of a protracted litigation and the likelihood of a lengthy appeals process."

Dean said it expects to take a charge, less imputed interest, in the second quarter of 2011 related to the settlement, but it didn't specify how much that charge would be.

Shares of Dean Foods were flat in premarket trading Wednesday after closing 0.8% higher at $12 in Tuesday's session.

-- Written by Miriam Marcus Reimer in New York.

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