Danone seeks full acquisition of Lifeway Foods with US$25 per share offer

USA – Danone has submitted an official bid to acquire all the outstanding shares of Lifeway Foods, a U.S.-based kefir maker.

Currently, Danone holds a 23.4% minority stake in Lifeway and aims to purchase all outstanding shares at US$25.00 each in cash, as disclosed in a filing to the U.S. Securities and Exchange Commission (SEC) on September 23, 2024. 

This offer represents a 59% premium over Lifeway’s average price of US$15.74 over the past three months, valuing the company at approximately US$283 million based on its current stock price of US$21.50.

In its letter of intent, Danone stated that the offer “represents a compelling proposition” for Lifeway’s shareholders and shows the company’s potential. 

Meanwhile, according to Lifeway’s annual report, the company has seen significant growth, reporting annual sales of US$160 million in 2023, up 13% from the previous year. 

Additionally, its Q2 2024 results showed a 25.3% increase in net sales, mainly driven by higher volumes of its drinkable kefir.

However, Lifeway has been facing internal challenges, particularly a family dispute involving its leadership. 

Ludmila and Edward Smolyansky, the largest investors and relatives of CEO Julie Smolyansky, recently initiated a campaign to replace the current board. 

In August, they filed a consent statement with the SEC, criticizing the management for lacking a strategic vision and missing market opportunities.

The family tensions date back to the founding of Lifeway by Michael Smolyansky in 1986. After his death in 2002, Julie and Edward took over leadership roles. 

In March 2022, the Smolyanskys called for Julie to resign and explore “strategic alternatives.” 

Although a temporary agreement was reached, recent developments have reignited the dispute. Edward has launched a competitor, Pure Culture Organics, leading to a legal conflict over alleged theft of proprietary information, which Lifeway resolved by dropping the lawsuit in June.

This follows an acquisition by Edward Smolyansky, a major shareholder in Lifeway Foods, a leading U.S. supplier of kefir and fermented probiotic products, of a former Saputo dairy plant in Belmont, Wisconsin, amidst ongoing tensions within the Company. 

Smolyansky, along with his mother Ludmila, is actively engaged in a proxy campaign to unseat the current board of directors, including CEO Julie Smolyansky, Edward’s sister.

The 100,000-square-foot facility, which will be repurposed for kefir production, is expected to begin operations in 2025. 

The plant has the capacity to process approximately one million pounds of fluid milk daily and will also produce an alternative kefir beverage made from almonds and cashews. 

Smolyansky highlighted the gap in the US market for non-dairy kefir products, noting that several retailers have expressed interest in a nut-based probiotic drink.

“This facility’s unique footprint and capabilities should allow us to produce both dairy and non-dairy products while minimizing the risk of allergy cross-contamination,” Smolyansky said.

Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE