Foremost draws bid by rival's parent

By Sean Hao
Advertiser Staff Writer

Dean Foods, parent of Meadow Gold Dairies, is looking to buy the assets of competitor Foremost Dairies-Hawaii, which shut down Monday.

Meadow Gold Dairies, which previously maintained that it had no interest in buying Foremost, said Dallas-based Dean Foods Co. bid on Foremost without its knowledge. The Foremost business, processing equipment, fleet of trucks and the Foremost brand name were put up for sale after the company said it was no longer economically feasible to continue operations.

If the Dean Foods bid is successful, Foremost's assets would be used to boost Meadow Gold's business, said Meadow Gold spokeswoman Jackie Smythe. Foremost would not comment on the matter while negotiations to sell its assets were ongoing, said spokeswoman Lynette Lo Tom.

The reasons for Foremost's shutdown and layoff of 87 workers just eight months after being sold by Osaka, Japan-based House Foods Corp. remains somewhat of a mystery.

Bahman Sadeghi and other undisclosed investors who bought Foremost in January from House Foods blame the former owner for leaving the Foremost plant in disrepair. However, House Foods says the buyers were aware of the plant's condition and received a discounted price.

News that Meadow Gold might end up with Foremost's assets wasn't a surprise for the Teamsters and Allied Workers Local 996, which represented Foremost's union employees. Rumors were floating around that Meadow Gold would buy the business, said Ron Kozuma, business agent for Local 996.

Sadeghi also has financial ties to Meadow Gold, now the state's lone milk processor. However, because Foremost is a failed business, experts have said its shutdown doesn't raise antitrust issues. Antitrust laws essentially were created to prevent companies from colluding to fix prices or exercising market power to exclude competition.

Still, some former Foremost employees remain bitter over the company's closing.

"It's real questionable because there's enough work for two operators," Kozuma said. "How this whole process went about is just wrong.

"The union is still keeping an eye on it and monitoring it."

Regardless of the circumstances surrounding Foremost's shutdown, Meadow Gold would be a logical buyer, said Chin Lee, a dairy extension specialist at the University of Hawai'i College of Tropical Agriculture and Human Resources.

"They would be the logical buyer primarily because of the fact that they need to increase their capacity," he said.

To take over business left behind by Foremost, Meadow Gold would likely need additional equipment.

"If they can buy it locally without having to bring it in from the Mainland, it makes the most sense," Lee said.

If Meadow Gold gets the rights to the Foremost brand, it could choose to continue selling products under that name. When Meadow Gold purchased Maui's Haleakala Dairy in 1998, the company continued to sell Haleakala Dairy-branded products on the Valley Isle.

In addition, when Meadow Gold's prior parent Southern Foods purchased the Excelsior dairy and juice-processing plant on the Big Island that same year, it continued to sell Excelsior-branded products.

"There is a brand loyalty" to Foremost, said Steve Dulce, an economic development specialist with the state Department of Agriculture. "There would be a lot of people that would miss it if it were not here."

Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.