Lifeway Foods has rejected a takeover offer from Danone valued at approximately $283 million, or $25 per share, calling the proposal “opportunistic” and stating that it substantially undervalues the company. The offer came on September 23, 2024, and Danone, which already owns a significant 23.4% stake in Lifeway, had hoped to acquire the remaining shares. However, Lifeway’s board of directors determined that the offer was not in the best interests of the company or its shareholders.
In a statement, Lifeway explained that the offer did not reflect the company’s true value or potential for growth. In response to the offer, Lifeway’s board also enacted a limited-duration shareholder rights plan, often referred to as a “poison pill.” This plan is designed to make it more difficult for any entity, person, or group to acquire 20% or more of Lifeway’s stock. If such an acquisition were to occur, existing shareholders would be granted the right to purchase preferred shares, thus diluting the value of the acquirer’s stake and making a takeover more costly.
Lifeway’s rejection of the offer comes as no surprise in the business world, where it is common for target companies to dismiss initial takeover bids, hoping to either spur a higher offer or attract the interest of other potential buyers. However, with Danone holding nearly a quarter of Lifeway’s shares, it is unlikely that any other company will step in with a competing bid.
Lifeway has remained focused on its strategic growth plan, which includes expanding its kefir brand into more households and exploring adjacent product categories. The company has consistently demonstrated strong financial performance, including record sales of $160 million in 2023, which represented a 13% increase from the previous year. This success has been driven by the rising consumer demand for kefir, a fermented dairy product known for its probiotic and digestive health benefits.
Kefir’s popularity has surged among consumers looking for ways to support digestion, particularly individuals suffering from conditions like Crohn’s disease and IBS. Julie Smolyansky, Lifeway’s CEO, has highlighted that kefir also offers additional health benefits, including positive effects on bone and heart health. These benefits, combined with Lifeway’s sustained growth, led the company to confidently reject Danone’s acquisition offer, believing that its future potential far exceeds the current valuation presented by the multinational corporation.
Lifeway’s strategic direction focuses on capitalizing on the growing interest in gut health and wellness. The company plans to continue expanding its product offerings, including potential new probiotic-based innovations, and to increase its distribution channels both domestically and internationally. This approach is aimed at solidifying Lifeway’s position as a leader in the probiotic dairy space and further driving long-term value for its shareholders.
In rejecting the offer, Lifeway also made it clear that it values its independence and intends to remain focused on delivering shareholder value through organic growth. This growth has been consistent, with the company reporting 19 consecutive quarters of year-over-year revenue increases. Lifeway’s ability to sustain growth even in a competitive market suggests that the company has a strong foundation and is well-positioned for the future.
While Danone’s initial bid was not successful, it is possible that the company could make another attempt in the future. However, Lifeway’s defensive measures, including the poison pill, will make it more difficult for Danone or any other entity to secure a controlling stake in the company without the approval of Lifeway’s board. The outcome of this situation will depend on whether Danone can convince Lifeway’s leadership that a higher bid is in the best interest of its shareholders.
For now, Lifeway remains focused on executing its growth strategy and continuing to build on its momentum. The company has shown a clear commitment to increasing its market share and expanding the reach of its kefir products, both of which are expected to continue to drive its success in the coming years.
