Lifeway Foods has announced that its board is “not opposed” to a potential sale, even after rejecting two acquisition offers from Danone. The French dairy giant, which already possesses a 23.3% stake in Lifeway, submitted its second proposal valued at approximately $307 million, equating to $27 per share, on November 15. This followed its earlier bid of $25 per share made in September. Despite these efforts, the US-based kefir producer has declined both offers.
Danone asserts that its most recent bid reflects a 72% premium over the three-month volume-weighted average price of Lifeway’s shares as of September 23. Nevertheless, Lifeway contends that Danone’s latest offer “substantially undervalues” the company.
In a statement released on November 26, Lifeway’s board expressed that it is “not opposed to the sale of the company at any price.” The board believes that Lifeway’s growth plans are poised to generate “superior value” for shareholders compared to Danone’s current offer.
In recent developments, Lifeway has displayed impressive growth, achieving 20 consecutive fiscal quarters of year-over-year topline growth. The company recorded an all-time high in annual sales, reaching $160 million in 2023—a remarkable 13% increase from the prior year. Furthermore, Lifeway projects its annual adjusted EBITDA to rise from $22 million in 2023 to a range of $45 million to $50 million by 2027. In light of these expectations, the Lifeway board pointed out that Danone’s proposal suggests a low EBITDA multiple of approximately 7.5x to 8.5x, not accounting for the significant synergies and additional operational efficiencies a strategic acquirer like Danone could achieve.
Danone’s interest comes amid ongoing family disputes regarding control and leadership at Lifeway. In August, Edward and Ludmila Smolyansky, Lifeway’s largest shareholders, filed a consent statement to oust the current board of directors, which includes CEO Julie Smolyansky. The Smolyanskys aimed to install leadership focused on revitalizing the company with a vision aligned with the best interests of shareholders. They supported both of Danone’s bids and recently advocated for the establishment of an independent special committee to evaluate and negotiate Danone’s latest offer.
The family dynamics are complex, as Edward and Ludmila believe that Julie is resistant to selling to Danone, fearing it would compromise her family legacy. Lifeway was founded in 1986 by their late father, Michael Smolyansky.
In conclusion, the food and beverage industry remains dynamic, with Lifeway Foods navigating potential acquisition talks while seeking to continue its growth trajectory. As businesses in the food and drink sector adjust to consumer trends, Lifeway’s situation underscores the ongoing complexities within the food and drink business landscape
