Danone increases offer for Lifeway Foods to US$307M

USA – Danone has raised its acquisition offer for Lifeway Foods, a leading maker of kefir and probiotic products, to approximately US$307 million.

The new offer, valued at US$27 per share, marks an increase from the initial US$283 million, or US$25 per share, proposed by Danone in September. According to a regulatory filing, Danone currently holds a 23.3% stake in Lifeway’s common shares.

In a letter addressed to Lifeway’s CEO, Julie Smolyansky, Danone expressed disappointment with the company’s initial rejection of its offer.

The dairy company emphasized that the increased offer “fully reflects the fundamental potential of the Company.”

Danone’s pursuit of Lifeway is part of its strategy to expand its portfolio of better-for-you dairy products, tapping into the growing consumer demand for healthy and fermented beverages like kefir, a yogurt-like dairy product known for its probiotic benefits.

Lifeway has experienced significant growth, with net sales for the quarter ending September 30 reaching US$46.1 million, an increase of US$5.2 million compared to the same period the previous year.

This marks the 20th consecutive quarter of year-over-year sales growth for the company, highlighting the rising consumer preference for healthier dairy alternatives.

The new offer comes after Lifeway’s resistance to Danone’s initial proposal, with the company pushing for a higher price.

While the US$2 per share increase is seen as a step toward meeting Lifeway’s demands, it remains uncertain whether it will be sufficient to secure the board’s approval.

In response, Lifeway stated that it would “carefully review and evaluate the revised proposal to determine the course of action that it believes is in the best interests of the Company and its shareholders and other stakeholders.”

As a long-term shareholder in Lifeway, Danone is well acquainted with the company and believes the acquisition would allow Lifeway to achieve its full potential by removing the constraints faced by a publicly listed company of its size.

Danone believes the combination would provide Lifeway with the additional resources needed to continue its growth trajectory.

The acquisition proposal is also unfolding amid a contentious family dispute within Lifeway.

CEO Julie Smolyansky has faced opposition from her mother, Ludmila, and brother, Edward Smolyansky, who have publicly supported Danone’s offer.

In a letter earlier this month, the two family members urged the Lifeway board to accept the offer, warning that further delays could result in missed opportunities for shareholders, employees, and consumers.

Lifeway’s stock has surged by 225% since a call from Kanen Wealth Management last year, which criticized the company’s undervaluation and suggested that Lifeway should consider exploring a sale.

As the situation continues to unfold, it remains to be seen whether Lifeway’s board will accept Danone’s revised proposal or seek another course of action.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.