Danone to divest 23% stake in Lifeway

USA – Danone has announced its exit to acquire Lifeway Foods, spelling an end to a takeover battle that spanned failed bids, legal disputes and ultimately, a strategic retreat.

The French multinational is set to offload shares worth US$67.4 million, marking the sale of its 23% stake in the leading USA kefir manufacturer. Danone first invested in Lifeway in 1999, taking a 15% stake for US$6.5 million.

But in recent years, the relationship has increasingly soured – culminating in failed takeover bids, boardroom tensions, and legal disputes that weighed on Lifeway’s finances and strained ties between the two companies.

Danone’s acquisition bids – of around US$283 million and US$307 million, respectively – were rejected, creating a rift the two sides never quite recovered from.

“Following extensive discussions with Lifeway Foods, and having explored all options regarding our existing holding, we decided not to pursue the acquisition of the company,” a Danone spokesperson said in a statement.

“This decision does not change our strategic focus on delivering high quality, healthy plant based and dairy products to American consumers.”

Lifeway accused Danone of undervaluing the business and attempting to force a leadership change; while Danone took the kefir maker to court over CEO payouts it had not approved.

Despite the tensions, Lifeway’s sales have continued to grow on the back of strong demand for health and wellness and gut health products.

 In FY25, the company reported record net sales and a sharp increase in profitability – a result it built on in Q1 2026, with sales up 36.7% year-on-year to US$63 million and net income up to US$4.7 million.

But its protracted legal and corporate battle with Danone has also taken a financial toll, with administrative costs rising by over US$2 million in 2025 as legal fees mounted – making a separation an increasingly welcome reprieve.

 For Danone, remaining in the kefir business has become a game of diminishing returns. Once its plan to acquire the remaining shares fell flat in late 2025, the food and beverage major quietly laid the groundwork for an eventual exit – relinquishing key board control rights and agreeing to a non-disparagement clause as part of the cooperation deal reached after it became clear a full acquisition was unworkable.

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