Lifeway Foods has said its board is “not opposed” to a potential sale of the company, despite rejecting two takeover bids from Danone.
Danone, which already holds a 23.3% stake in Lifeway, tabled its second offer, worth around $307m, or $27 per share, on 15 November, following an initial proposal of $25 in September. The US kefir maker has turned down both approaches.
The French dairy major said its second bid represents a 72% premium over the three-month volume-weighted average price of Lifeway's shares as of 23 September.
Lifeway insists Danone's latest offer “substantially undervalues” the company.
However, in a statement issued yesterday (26 November), Lifeway's board said it is “not opposed to the sale of the company at any price".
The board believes Lifeway's plans to grow the business have the potential to deliver “superior value” to shareholders compared with Danone's latest offer.
In rejecting the bid, Lifeway said it has achieved 20 consecutive fiscal quarters of year-over-year topline growth.
It reported record annual sales of $160m in 2023, marking a 13% increase from the previous year.
Lifeway forecasts its annual adjusted EBITDA will grow from $22m in 2023 to between $45m and $50m by 2027.
Based on that 2027 anticipated range, the Lifeway board highlighted that Danone's proposal implies a low EBITDA multiple of approximately 7.5x to 8.5x, even before "accounting for substantial synergies and additional operational efficiencies that Danone (or another strategic acquirer) could realise".
Danone's interest comes amid a long-running family dispute over the control and leadership of Lifeway.
In August, Edward and Ludmila Smolyansky, Lifeway’s largest investors, filed a consent statement to unseat the company’s current board of directors, including CEO Julie Smolyansky.
Edward and Ludmila – the brother and mother of CEO Julie respectively – said at the time they were trying to bring in leadership “committed to revitalising the company with a strategic vision aligned with the best interests of its shareholders”.
They have backed both of Danone's bids. Earlier this week, they urged the formation of an “independent special committee” to assess and negotiate Danone's latest offer.
Edward and Ludmila said they believe Julie thinks selling to Danone “would destroy her family’s legacy”. The company was set up by the late father of Edward and Julie, Michael Smolyansky, in 1986.
