Danone has initiated efforts to acquire Lifeway Foods, a leading US producer of kefir, in which the French multinational already holds a 23.4% minority stake. This official bid comes as Danone, known for its Alpro and Activia brands, seeks to gain full control of Lifeway.
In a recent filing to the US Securities and Exchange Commission (SEC) dated September 23, 2024, Lifeway confirmed Danone’s acquisition proposal. The French company’s offer includes acquiring all outstanding common stock not currently held by its shareholders for a purchase price of $25.00 per share in cash. This transaction will be financed entirely from Danone’s existing cash reserves.
The $25 offer represents a substantial 59% premium over Lifeway’s average share price of $15.74 over the last three months. However, as of the previous Monday, Lifeway’s stock price was $21.50, reflecting a market cap of $318 million. If the deal proceeds, Danone’s total cash outlay for Lifeway would be approximately $283 million.
In its letter of intent, Danone articulated that the offer “represents a compelling proposition to [its] shareholders and reflects the fundamental potential of the company.” It is essential to note that Lifeway has been embroiled in family disputes regarding the company’s governance.
Previously, key Lifeway investors, Ludmila and Edward Smolyansky, the mother and brother of CEO Julie Smolyansky, filed a consent statement in August 2024 to replace the current board, advocating for leadership that aligns with the best interests of the shareholders. Edward Smolyansky, a former COO, criticized the current management for lacking a strategic vision, stating, “Under my sister Julie’s authority, Lifeway has been on autopilot for far too long.”
Founded in 1986 by Michael Smolyansky, Lifeway has undergone significant leadership changes since his death in 2002. Julie Smolyansky has served as CEO alongside Edward as COO. In March 2022, persistent calls for Julie to step down resulted in Lifeway exploring “strategic alternatives” in the summer of 2023 alongside a review of its board structure.
However, conflict resurfaced recently, especially with Edward launching Pure Culture Organics, a direct competitor to Lifeway. This led to a legal dispute between the family members over alleged misappropriation of proprietary information, which Lifeway decided to resolve earlier in June.
According to industry observations, Danone’s interest in Lifeway aligns with its broader strategy in the food and beverage sector, targeting healthier dairy offerings. The COVID-19 pandemic heightened consumer focus on immunity and gut health-related products, thereby enhancing the appeal of kefir as part of evolving food and drink consumer trends.
In 2023, Lifeway achieved record annual sales of $160 million, a 13% increase compared to the previous year. Its second-quarter results indicated a 25.3% rise in net sales year-on-year to $49.2 million, primarily driven by boosted sales volumes of branded drinkable kefir.
A Danone spokesperson has stated that they will refrain from commenting further at this stage. Additionally, inquiries have been directed toward Edward Smolyansky’s representatives for their perspective on the potential deal.
This development undoubtedly contributes to ongoing discussions surrounding food and beverage industry trends, as companies navigate consumer demands and competitive landscapes in the food and drink business.
