USA – Danone, an investor in US-based kefir maker Lifeway Foods, has initiated plans for litigation against the company, alleging a breach of a shareholder agreement between the two parties.
The French multinational, which has held a stake in Lifeway since 1999, recently made two takeover bids for the company, both of which were rejected.
In a letter Danone accused Lifeway’s CEO, Julie Smolyansky, and the company’s board of violating the shareholder agreement by granting Smolyansky nearly 300,000 shares without Danone’s consent.
The dispute centers on a securities filing made by Smolyansky, in which she acknowledged that the issuance of these shares required approval from Danone, an approval that had not been granted.
Danone’s deputy CEO, Shane Grant, in his letter to Lifeway’s board, described the issuance as “null, void and of no force and effect,” and indicated that the company would take necessary legal action to enforce its rights.
The letter, which was made public through the US Securities and Exchange Commission, further expressed Danone’s concerns over what it views as a deliberate attempt by Lifeway’s leadership to undermine shareholder value and disregard Danone’s contractual rights.
Lifeway, however, has responded to Danone’s accusations, claiming that the shareholder agreement itself violates Illinois state law, where the company is based.
According to Lifeway, the agreement has allowed Danone to exploit the relationship to the detriment of Lifeway, with the French company benefiting unfairly from the arrangement.
A spokesperson for Lifeway also highlighted the company’s strong performance in 2024, noting that its reported quarterly results exceeded historic benchmarks.
The company stated that it remains focused on delivering superior value to its shareholders and customers and will respond to Danone’s letter in due course.
The origins of the dispute trace back to September when Danone made an unsolicited offer to acquire the remaining shares of Lifeway for US$25 per share, a 59% premium over the stock’s three-month volume weighted average price at the time.
This offer was rejected by Lifeway in November, with the company arguing that the bid undervalued its business.
Danone subsequently raised its offer to US$27 per share, but this was also declined.
Despite these rejections, Lifeway’s board later expressed that it was not opposed to a potential sale of the company, but Danone has questioned whether the company is genuinely open to such an option.
Danone’s Grant emphasized that Lifeway’s actions, including the award of shares to Smolyansky, are seen as attempts to sabotage any potential sale and to diminish the value for shareholders in the event of a change of control.
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