Lifeway Foods remains open to acquisition despite rejecting Danone’s offers

USA – Lifeway Foods has confirmed its openness to a potential sale, even after rejecting two takeover bids from French dairy giant Danone.

In a statement issued on 26 November, the US kefir manufacturer emphasized that its board is “not opposed to the sale of the company at any price.”

Danone, which already holds a 23.3% stake in Lifeway, made an initial bid of US$25 per share in September, followed by a revised offer of US$27 per share on 15 November. According to reports, this latest proposal values Lifeway at approximately US$307 million.

The offer represents a 72% premium over Lifeway’s three-month volume-weighted average share price as of 23 September. However, Lifeway has stated that Danone’s offer “substantially undervalues” the company.

Lifeway’s board argues that the company’s strategic growth plans could deliver “superior value” to shareholders compared to Danone’s bid.

The board noted that Lifeway has achieved 20 consecutive fiscal quarters of year-over-year topline growth, including record annual sales of US$160 million in 2023, a 13% increase from the previous year.

The company forecasts its adjusted EBITDA to grow from US$22 million in 2023 to between US$45 million and US$50 million by 2027.

Based on this projection, Lifeway suggested that Danone’s offer implies a low EBITDA multiple of approximately 7.5x to 8.5x, not accounting for potential synergies and operational efficiencies.

A report by industry analysts highlighted that Danone’s interest comes amid internal disputes within the Smolyansky family, who founded Lifeway in 1986.

Edward and Ludmila Smolyansky, the brother and mother of CEO Julie Smolyansky, have backed both of Danone’s offers.

In August, they filed a consent statement to remove the current board, accusing it of lacking a strategic vision aligned with shareholders’ interests. The duo has called for an independent committee to evaluate Danone’s proposal objectively.

Edward and Ludmila also claim that Julie Smolyansky’s resistance to selling Lifeway stems from a desire to preserve the family’s legacy.

The company was established by their late father, Michael Smolyansky, and has remained under family control since its inception.

Lifeway’s future remains uncertain as the board weighs potential offers against its long-term growth strategy.

While rejecting Danone’s current proposal, the board’s latest remarks indicate a willingness to consider a sale under the right conditions, setting the stage for further developments in this closely watched corporate saga.