Danone reconsiders Lifeway acquisition with new NDA agreement

USA – Danone has signed an NDA with Lifeway Foods to allow the French giant to weigh up whether to make another bid for the USA kefir business.

The NDA allows Danone to access confidential information about Lifeway’s operations, financials, and strategic plans, enabling the company to assess whether a fresh bid would be viable.

While no formal offer has been made, the agreement suggests that Danone is weighing its options as it looks to strengthen its presence in the growing probiotic and functional foods market.

The NDA terms expire on a “standstill expiration date” of 15 September – although it can be extended by a week if the companies are in “good faith discussions”.

Earlier this year, Lifeway Foods maintained that the shareholder agreement it has with Danone is “invalid,” challenging claims by the French multinational that the kefir producer violated a longstanding investor deal.

The dispute stems from Danone’s allegation that Lifeway breached an agreement by awarding nearly 300,000 shares to its CEO, Julie Smolyansky, without the company’s approval.

Danone, which owns a 23% stake in Lifeway, has threatened litigation, claiming the share award undermines its contractual rights.

In a letter to Lifeway’s board, Danone’s deputy CEO, Shane Grant, accused the kefir maker of approving a “value-destroying gifting program” for its CEO. Grant argued the move was aimed at “destroying shareholder value” while ignoring Danone’s established rights.

However, Lifeway dismissed the claims, insisting the agreement, dating back to 1999, is void under Illinois state law. The company issued a statement asserting its intention to pursue legal remedies to nullify the deal.

Lifeway emphasized that an invalid agreement does not gain validity through longstanding adherence to its terms.

The legal standoff unfolds against the backdrop of Danone’s attempt to acquire Lifeway. In September, Danone offered US$25 per share for the business, which Lifeway’s board swiftly rejected, deeming the bid insufficient.

Last month, Edward and Ludmila, who own around 23.2% of Lifeway’s shares, said they had filed a “definitive consent statement” to the SEC to overhaul Lifeway’s board, including replacing CEO Julie, with new nominees “focused on restoring accountability, transparency and long-term shareholder value”. Lifeway called the move “legally deficient”.

The filing added: “If a definitive acquisition agreement has not been executed by the standstill expiration date, Danone presently intends to consent with respect to all of the shares of common stock it owns in favour of Edward Smolyansky’s proposals set forth in his pending consent solicitation statement to replace the entire Lifeway board of directors.”

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