USA – Lifeway Foods has maintained that the shareholder agreement it has with Danone is “invalid,” challenging claims by the French multinational that the kefir producer violated a longstanding investor deal.
The dispute stems from Danone’s allegation that Lifeway breached an agreement by awarding nearly 300,000 shares to its CEO, Julie Smolyansky, without the company’s approval.
Danone, which owns a 23% stake in Lifeway, has threatened litigation, claiming the share award undermines its contractual rights.
In a letter to Lifeway’s board, Danone’s deputy CEO, Shane Grant, accused the kefir maker of approving a “value-destroying gifting program” for its CEO. Grant argued the move was aimed at “destroying shareholder value” while ignoring Danone’s established rights.
However, Lifeway dismissed the claims, insisting the agreement, dating back to 1999, is void under Illinois state law. The company issued a statement asserting its intention to pursue legal remedies to nullify the deal.
Lifeway emphasized that an invalid agreement does not gain validity through longstanding adherence to its terms.
The legal standoff unfolds against the backdrop of Danone’s attempt to acquire Lifeway. In September, Danone offered US$25 per share for the business, which Lifeway’s board swiftly rejected, deeming the bid insufficient.
In November, Danone raised its offer to US$27 per share, but this too was declined. Despite these rejections, Lifeway later stated it was “not opposed” to selling the company at a more accurate valuation.
Smolyansky reiterated that Danone’s proposals significantly undervalued Lifeway, which remains committed to exploring all strategic options to safeguard shareholder interests.
The corporate tensions are further complicated by internal family disputes within Lifeway. Smolyansky’s mother and brother, who collectively own almost 30% of the company, have publicly backed Danone’s acquisition attempts.
This comes after the two previously called for Julie Smolyansky’s resignation and urged the company to consider alternative strategies.
The family disagreements reignited last year when Ludmila and Edward Smolyansky launched Pure Culture Organics, leading to a legal battle with Lifeway. The case was eventually dropped, but the underlying conflict has persisted.
Lifeway remains optimistic about its financial performance, releasing preliminary fourth-quarter sales figures for 2023 of between US$45.1 million and US$46.6 million, up from US$42.1 million in the same period the previous year.
The company also forecast net sales for 2024 to reach up to US$186.5 million, reflecting confidence in its business strategy.
Smolyansky described Danone’s acquisition efforts as “opportunistic” and reaffirmed Lifeway’s commitment to delivering value to its shareholders through sustained growth and strategic execution.
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