Danone has signed a Non-Disclosure Agreement (NDA) with Lifeway Foods. This move allows the French multinational to evaluate the possibility of making another acquisition bid for the U.S. kefir business.
Last year, Lifeway declined two takeover offers from Danone, which is one of the company’s largest shareholders.
Since then, tensions have escalated, with Danone filing a lawsuit that claims Lifeway breached a shareholder agreement. Lifeway, on its part, has described Danone’s offers as a “hostile takeover.”
Furthermore, internal conflicts persist within Lifeway, particularly between Chair and CEO Julie Smolyansky and her family members, Ludmila and Edward Smolyansky, who are shareholders.
In an SEC filing dated August 1, it was noted that representatives from both Danone and Lifeway have initiated discussions to “reset” their relationship and explore opportunities for a “potential acquisition.”
The NDA, signed on August 1, is intended to facilitate Danone’s further exploration of this acquisition. According to the SEC filing, the NDA also imposes restrictions on Danone’s ability to publicly propose future acquisitions, remove board members, or engage in any unsolicited solicitations contrary to Lifeway’s recommendations.
This restriction applies to Edward Smolyansky’s pending consent solicitation to replace the entire Lifeway board.
Last month, Edward and Ludmila Smolyansky, who own approximately 23.2% of Lifeway shares, filed a definitive consent statement with the SEC to restructure Lifeway’s board. They aim to replace CEO Julie with nominees “focused on restoring accountability, transparency, and long-term shareholder value.” Lifeway has characterized their move as “legally deficient.”
The NDA also specifies a “standstill expiration date” of September 15, with the option to extend by one week if both companies are in “good faith discussions.”
Furthermore, the filing indicated, “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 favor of Edward Smolyansky’s proposals set forth in his pending consent solicitation statement to replace the entire Lifeway board of directors.”
It’s important to note that Danone currently holds around 22.7% of Lifeway.
