Private equity giant KKR and Capitol Peak have won the auction to buy Borden Dairy out of bankruptcy, according to court documents and people familiar with the matter.

The deal still needs to be approved by the bankruptcy court in Delaware, where a hearing is scheduled for Thursday. Terms of the deal were not disclosed.

Capitol Peak was founded in 2017 by Gregg Engles, the former head of Dean Foods, a rival of Borden Dairy. KKR bought Borden in 1995 for $2 billion and later sold off divisions and company brands while remaining a lender on its $175 million term loan.

Borden filed for Chapter 11 protection in January. According to court documents, KKR thought it had reached an agreement with Borden to avoid bankruptcy and was unhappy when the company filed in January. KKR said the bankruptcy mostly benefited ACON Investments.

In its bankruptcy filing, Borden cited a 46% drop in fluid milk consumption per capita from 1980 to 2018. It said the cost of raw milk, which it buys from small farmers, rose 27% in the past year.

The company reported $1.2 billion in sales in 2018 but recorded a loss of more than $14.6 million. In 2019, it reported a loss of $42.4 million. In its bankruptcy filing, Borden said it had assets and liabilities that were each between $100 million and $500 million.

Borden, as recently as April, had been considering a possible merger with Dean Foods. Dean Foods filed for Chapter 11 bankruptcy last November.

“That was an idea that I believe could have worked and been a good outcome for all the stakeholders and created an independent processor. … We thought it was a good idea but, frankly, it came late in their process,” Borden chief executive officer Tony Sarsam said in May.

Grupo Lala subsidiary Laguna Dairy is still the majority owner of Borden.