Lifeway Foods is poised to “move forward with clarity and stability,” according to the company’s CEO, following a significant “co-operation” agreement with minority shareholder Danone.
Over the past year, tensions have escalated between Lifeway and Danone—a relationship that began in 1999 when the French giant first invested in the US group. After rejecting two takeover offers from Danone, both companies found themselves embroiled in litigation.
This summer, “representatives” from both Lifeway and Danone initiated discussions to “reset” their relationship and explore a “potential acquisition.”
However, last month, Danone announced it would not present another offer and would evaluate whether to sell its 22.7% stake. Additionally, the Activia maker is considering supporting a push by Lifeway’s largest shareholder to replace the company’s board.
In a statement issued on September 30, Lifeway announced a comprehensive agreement with Danone.
This deal includes Lifeway “refreshing” its board by appointing four new directors. By the end of the month, the company will also separate the roles of chair and CEO, which have been held by Ms. Smolyansky. Additionally, both companies have agreed to pause their litigation.
“Lifeway has always been about resilience, innovation, and community. This agreement allows us to move forward with clarity and stability, while continuing to focus on what matters most: bringing probiotic-rich foods to more families and creating value for our shareholders,” said Ms. Smolyansky, who currently serves as Lifeway’s chair, president, and CEO. “We are pleased to have this agreement in place as we enter this next chapter of growth.”
The litigation primarily revolved around a shareholder agreement that Danone claimed Lifeway violated with a share award to Ms. Smolyansky earlier this year. Lifeway, in turn, argued that the shareholder agreement breached Illinois state law, where the company is headquartered.
Beyond halting litigation, the co-operation deal stipulates that Lifeway will adhere to the contentious shareholder agreement. In exchange, Danone has agreed to waive certain rights, including its ability to appoint a board member at Lifeway.
Moreover, Danone has committed not to support any board replacement proposals from Lifeway until after June 30 next year.
In July, Ludmila and Edward Smolyansky, the mother and brother of Julie—the company’s largest shareholders—submitted a “definitive consent statement” to the SEC, aiming to replace Lifeway’s board, including Julie, with candidates “focused on restoring accountability, transparency, and long-term shareholder value.”
This move is part of an ongoing family dispute, where Ludmila and Edward have publicly criticized Julie’s management of the company.
According to Lifeway’s new agreement with Danone, the three new candidates joining the US group’s board will be independent directors, “unaffiliated with Danone, Edward and Ludmila Smolyansky, Lifeway, or any current Lifeway officer or director.”
Director Pol Sikar will leave by Lifeway’s 2025 annual meeting, while Jay Scher and another director will step down by the company’s 2026 annual meeting.
