There’s a new milkman in Chicago.
Geoff Hoffmann, co-CEO of the Winnetka-based private equity firm of the same name, became the top bidder Wednesday for the bankrupt assets of century-old Oberweis Dairy, placing everything from its North Aurora plant up to 40 branded ice cream stores, under new possession.
The undisclosed bid from the Hoffmann family of companies through its investment arm, Osprey Capital, beat out Brian Boomsma, owner of Chicago-based Dutch Farms, who had made a $20 million bid in April for Oberweis.
“We think the brand is as good as it gets in ice cream and dairy,” Hoffmann said Wednesday. “We are excited and ready to invest in the company to make it as big and strong as it has ever been.”
The deal, pending final court approval, will add the Oberweis dairy company to Hoffmann’s diverse investment portfolio, which includes everything from wineries and charter cruise ships to the Florida Everblades, a hockey team minor league.
Hoffmann’s real estate arm owns more than $1 billion in commercial, industrial and residential properties, including more than two dozen buildings on the North Shore and the 85th floor penthouse of Trump Tower in Chicago.
Founded by patriarch David Hoffmann in 2002, the family-owned investment company owns more than 100 brands in 30 countries. Oberweis would be its first foray into the dairy business, but the Hoffmann family nevertheless has a dairy pedigree.
“My grandfather was a door-to-door milk delivery boy in a small town in Missouri and my father actually did his truck ride with him at three in the morning every day,” Hoffmann said in an interview last week. “So we’ve been in the industry for a long time.”
Oberweis, known for its bottled milk and old-fashioned ice cream, has been in the dairy industry for a long time. But the past few years have been difficult for the family-owned business, which filed for Chapter 11 bankruptcy in April amid falling revenue, mounting debt and some costly strategic mistakes.
Founded in 1915 by Peter Oberweis, an Aurora dairy farmer who sold milk from a single horse-drawn wagon, the company grew into a multistate operation with ice cream shops in Chicago, W. ‘Indiana, Michigan and St. Louis, widespread grocery distribution and door-to-door products. delivery service.
It outsources some manufacturing, but has a 27-year-old dairy plant at its North Aurora headquarters.
The Oberweis name became synonymous with much more than milk in the new millennium when Jim Oberweis, president of the dairy and grandson of its founder, launched a series of high-profile, but mostly unsuccessful, bids for office. Illinois politicians as a Republican candidate.
In 2007, Joe Oberweis took the reins as the fourth generation of the family business, but the road has been rocky lately.
While its home delivery service thrived during the pandemic lockdowns, Oberweis has struggled ever since, with annual revenue declining from an all-time high of $116 million in 2020 to $95 million l last year, according to its bankruptcy filing.
In addition to the broader challenges facing the dairy industry, which is losing ground to alternatives such as almond milk, Oberweis has made a number of missteps, including an ill-fated attempt to enter Asian markets, by outsourcing organic milk and sweetened beverage products to a Texas manufacturer. and the transition to amber-colored bottles in grocery stores, which customers found unappealing.
Joe Oberweis resigned in May 2023, and after millions of dollars in cost cuts failed to stem operating losses, the family decided to sell the company in October. As no buyer came forward, Oberweis Dairy filed for bankruptcy protection on April 12. The company also notified the state that it may lay off 127 workers at the North Aurora dairy on June 11 unless a buyer is found.
On April 23, the company announced that Brian Boomsma, owner of Chicago-based Dutch Farms, had made a $20 million offer for virtually all of the bankrupt Oberweis’ operating assets.
Dutch Farms, headquartered in the Pullman neighborhood on Chicago’s South Side, is a family-owned business with brands offering cheese, eggs, milk, butter and other dairy products.
The same day, Hoffmann announced its intention to launch a competitive offer for Oberweis, a month later on Friday, a court-imposed deadline. The two bidders participated in an auction Wednesday morning at a Chicago law firm, and Hoffman emerged victorious, pending court approval.
Boomsma, a bankruptcy creditor whose company sells eggs and other products through Oberweis and delivers most of its milk to grocery stores, hoped to improve efficiency and make the dairy offering more affordable under its ownership.
Instead, Boomsma congratulated – and its continued services – the successful bidders, which were also well received by Oberweis management.
“We look forward to exciting future developments with the Hoffmann family of companies,” said Adam Kraber, president of Oberweis Dairy, in a press release.
For Geoff Hoffmann, the investment thesis is based on the principle that cream always takes first place and that premium Oberweis dairy products will do the same.
Her due diligence process included driving to Oberweis stores with four sons to sample a variety of dairy treats.
“I’ve never eaten so much ice cream in my life,” Hoffmann said last week, just before making an offer to buy Oberweis. “The best ice cream in the world, incredible chocolate milk, good milk.”
Plans for Oberweis include building on the brand’s heritage, keeping the North Aurora plant operating and, if all goes well, making it much busier, Hoffman said. The new owners plan to focus investments on the plant to improve production capabilities and streamline operations, he said.
He also plans to keep the current management team together, which Hoffman said has done most of the “heavy lifting” needed to cut costs, quench the red ink and position the company for growth.
“From our perspective, it’s going to be all about growth,” Hoffman said. “Most of the tough decisions have been made.”
A sale hearing is scheduled for June 5 in a Chicago bankruptcy court, and the acquisition is expected to be completed within 10 days of court approval, Hoffman said.
rchannick@chicagotribune.com