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Dive Briefing:
- According to a regulatory filing, dairy giant Danone has offered to pay $25 per share in cash to buy the remaining shares of kefir product maker Lifeway Foods. Danone, a longtime Lifeway shareholder, currently owns 23.4% of the common stock.
Danone said in a letter to Lifeway on Monday that the offer was “a compelling proposition for shareholders and reflects the company’s fundamental potential.” The $25-a-share offer represents a 59% premium to Lifeway’s three-month average of $15.74. Lifeway’s stock closed Monday at $21.50, giving it a market capitalization of $318 million.
The takeover bid comes as Lifeway is embroiled in a bitter family feud between its CEO and her relatives. The majority shareholder has urged Lifeway to sell and accused the board and CEO of “mismanaging the business.”
Dive Insight:
Danone has been a shareholder of Lifeway for over 20 years and has experienced firsthand the company’s internal dynamics, both good and bad.
The pandemic era has brought a new wave of consumers interested in gut health, and Lifeway has been one of the biggest beneficiaries. Lifeway, which makes kefir, a yogurt-like dairy beverage, and fermented probiotic products, reported annual sales of $160 million in 2023, up 13% from the previous year. The Illinois-based company has posted 19 consecutive quarters of annual growth.
According to Julie Smolyanski, CEO of Lifeway, consumers use kefir to help regulate digestion, especially those with Crohn’s disease and IBS. The product is also known to support bone and heart health.
Danone is familiar with healthy dairy products and has a portfolio of yogurts including probiotic-focused Activia and low-sugar Too Good yogurts. Adding Lifeway and its fast-growing Better Together product line complements these and other products already in Danone’s portfolio. It also leverages its strengths, including its global scale, to further grow Lifeway products.
“We believe Lifeway has a compelling opportunity to realize its full potential through a combination with Danone, removing the constraints and additional resources required to be a public company of Lifeway’s size,” Shane Grant, CEO of Danone North America, said in the letter. “We are confident that Danone’s operational and dedicated resources will unlock significant opportunities and value for Lifeway, particularly by providing additional innovation, distribution and marketing support.”
Grant cited Lifeway’s “solid performance” over the past several years and praised its ability to “bring kefir products to market that meet consumer demand and preferences.”
LifeWay did not respond to a request for comment.
If realized, the Danone acquisition could satisfy critics who argue that the small company should sell itself.
Last year, Kanen Wealth Management said Lifeway’s stock was undervalued and that it could not be fully realized with the board and CEO in place. He called for Lifeway to be sold and estimated that it could get between $15 and $20 per share, compared to the $7 share price at the time.
Lifeway has been embroiled in a tumultuous family feud over the past few years. Julie Smolyansky has faced public criticism from her mother, Ludmila Smolyansky, who founded Lifeway, and her brother, Edward Smolyansky, who have pushed for her ouster and urged Lifeway to seek “strategic alternatives.”
Last month, Ludmila and Edwards said Lifeway’s board had “overseen serious and repeated failures of corporate governance that have harmed the company and its employees and resulted in poor financial results for shareholders.” Edwards accused the company of lacking leadership and failing to understand and follow existing trends in the interview.
