Danone is attempting to acquire Lifeway Foods, the US-based kefir maker in which the French giant holds a minority stake.
The Alpro and Activia brands owner is a long-time shareholder in Lifeway, currently holding a 23.4% stake in the business, but it has now made an official bid to take full control.
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The bid was confirmed in a filing to the US regulator, the Securities and Exchange Commission (SEC) from Lifeway yesterday (23 September).
It said: “On September 23, 2024, Danone North America PBC sent a letter to the issuer, proposing to acquire all of the outstanding shares of common stock not currently held by the reporting persons for a purchase price of $25.00 per share in cash.”
It said the transaction would be fully funded in cash from Danone’s existing reserves.
The $25 per share offer is a significant 59% premium to $15.74, Lifeway’s average price during the last three months. However, Lifeway’s stock closed Monday at $21.50 a share, giving it a market capitalisation of $318m.
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By GlobalDataAt $25 a share, it is estimated Danone will have to pay around $283m to buy the business outright.
In its letter of intent to buy Lifeway, Danone said the offer “represents a compelling proposition to [its] shareholders and reflects the fundamental potential of the company”.
Danone will be well aware that Lifeway has long been embroiled in a family dispute around control of the business.
As recently as August, Ludmila and Edward Smolyansky, Lifeway’s largest investors, filed a consent statement to unseat the company’s current board of directors, including CEO Julie Smolyansky.
The shareholders announced the filing with the SEC on 13 August, thereby launching their “Life Back to Lifeway” campaign.
Ludmila and Edward - mother and brother of CEO Julie respectively - said they are trying to bring in leadership “committed to revitalising the company with a strategic vision aligned with the best interests of its shareholders”, according to a statement.
Edward Smolyansky, former COO of Lifeway, said at the time: “Under my sister Julie’s authority, Lifeway has been on autopilot for far too long, missing critical market opportunities due to a lack of strategic vision. It’s time for a fresh approach to leadership that prioritises growth and innovation over personal agendas.”
Illinois-based Lifeway Foods was founded by Michael Smolyansky in 1986 and run with support from his wife Ludmila. Following Michael’s death in 2002, his children Julie and Edward took over leadership, with Julie as CEO and Edward as COO.
However, in March 2022, Ludmila and Edward called for Julie Smolyansky to step down and for Lifeway to begin pursuing “strategic alternatives”.
The issue was said to have been resolved the following summer, as Lifeway agreed to review strategic alternatives, as well as find a financial advisor and new replacements for its board.
However, the family feud has been rekindled in recent months.
Edward has formed Pure Culture Organics, a Lifeway competitor. Its establishment sparked a legal dispute between the Smolyanskys. In April, Lifeway filed a claim against Pure Culture Organics, claiming it had stolen proprietary information to set up the business. Lifeway ended the lawsuit in June.
Earlier this month, Edward Smolyansky acquired a dairy plant in the US which could be used as Pure Culture Organics’ first kefir production site.
Danone’s interest in better-for-you dairy products is well established with a yogurt portfolio that includes probiotic-focused Activia and the low-sugar Too Good brand.
The potential of kefir has been evident ever since the Covid-19 pandemic super-charged consumers’ interest in products linked to immunity and gut health.
Lifeway reported record annual sales of $160m in 2023, an increase of 13% year-on-year.
Its Q2, 2024, results, issued last month, revealed net sales grew 25.3% year-on-year to $49.2m. The business said the rise was “was primarily driven by higher volumes of our branded drinkable kefir”.
Just Food has asked Danone and Lifeway for their comments on the French company’s bid to take full control of the US firm. A Danone spokesperson said the company would not be making any comment.
This publication has also reached out to Edward Smolyansky’s representatives to get his reaction to the potential deal.
