Dive Brief:
- Dairy giant Danone offered to pay $25 per share in cash to buy the remaining stock it doesn’t already own in kefir products maker Lifeway Foods, according to a regulatory filing. Danone, a long-time shareholder in Lifeway, currently owns 23.4% of its common shares.
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Danone said in a letter sent to Lifeway on Monday that the offer “represents a compelling proposition to [its] shareholders and reflects the fundamental potential of the Company.” The $25-a-share offer is a 59% premium to $15.74, Lifeway’s average price during the last three months. Lifeway’s stock closed Monday at $21.50 a share, giving it a market cap of $318 million.
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The acquisition proposal comes as Lifeway has been embroiled in a bitter family dispute between the CEO and her relatives. A large shareholder has urged Lifeway to sell itself and accused the board and its CEO of “mis-managing the business.”
Dive Insight:
Danone has been a shareholder in Lifeway for more than two decades and has had a front-row seat to the inner workings of the company — both good and bad.
The pandemic era brought a new wave of consumers interested in gut health and Lifeway was among the biggest beneficiaries. Lifeway — which makes kefir, a dairy beverage similar to yogurt, and fermented probiotic products — reported record annual sales of $160 million in 2023, an increase of 13% from the prior year. The Illinois-based company has posted 19 consecutive quarters of year-over-year growth.
Consumers have turned to kefir to regulate their digestion, particularly people afflicted with Crohn’s disease and IBS, according to Julie Smolyansky, Lifeway’s CEO. The product is also known to have benefits for bone and heart health.
Danone is no stranger to healthy dairy products, with a yogurt portfolio that includes probiotic-focused Activia and low-sugar Too Good yogurts. Adding the fast-growing Lifeway and its better-for-you offerings would complement these and other products already in Danone’s portfolio. It also would be able to tap into its strengths, including its global scale, to further grow Lifeway’s products.
“We believe Lifeway has an attractive opportunity to achieve its full potential through a combination with Danone, removing the constraints and additional resources required for a publicly listed company of Lifeway’s size,” Shane Grant, CEO of Danone North America, said in a letter. “We are confident that Danone’s operations and dedicated resources would unlock significant opportunities and value for Lifeway, notably by providing further innovation, distribution and marketing support.”
Grant noted the “solid performance” of Lifeway during the last few years and praised its ability “to bring to market kefir products matching consumers’ demand and preferences.”
Lifeway did not respond to a request for comment.
If it materialized, a purchase by Danone could fulfill a push from critics urging the small company to sell itself.
Last year, Kanen Wealth Management called Lifeway’s stock undervalued and said the price could not be fully realized with the board and CEO in place. He called for a sale of Lifeway, which he estimated could receive between $15 and $20 a share compared to its current price at the time of $7.
Lifeway has been embroiled in a tumultuous family feud for the past few years. Julie Smolyansky has drawn public criticism from her mom, Ludmila Smolyansky, who founded Lifeway, and her brother Edward Smolyansky. They have pushed for Julie Smolyansky’s ouster and urged Lifeway to explore “strategic alternatives.”
Last month, Ludmila and Edward said the Lifeway board has “overseen significant and repeated failures of corporate governance that have harmed the business and its employees and driven poor financial results for shareholders.” In an interview, Edward accused the company of lacking leadership and failing to understand and keep up with existing trends.
