Lifeway Foods can “move forward with clarity and stability”, the kefir maker’s CEO has said, after the company struck a “co-operation” deal with minority shareholder Danone.
The relationship between Lifeway and Danone – which invested in the business in 1999 – has become strained over the last 12 months after the US group rejected two takeover bids from the French giant and the companies embarked on litigation against each other.
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This summer, “representatives” of Danone and Lifeway started talks to “reset” the relationship and hold discussions over a “potential acquisition”.
However, last month, Danone said it would not table another offer and would weigh up whether to sell its 22.7% stake. The Activia maker said it would also ponder whether to support a move by the Lifeway’s largest shareholder to replace the company’s board.
But, in a statement issued yesterday (30 September), Lifeway announced a multi-faceted agreement with Danone.
The deal will see Lifeway “refresh” its board by appointing four new directors. By the end of the month, the company will also separate the roles of chair and CEO, which have been held by Ms. Smolyansky. The businesses have also agreed to “stay” the litigation between them.
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By GlobalData“Lifeway has always been about resilience, innovation and community. This agreement allows us to move forward with clarity and stability, while continuing to focus on what matters most: bringing probiotic-rich foods to more families and creating value for our shareholders,” Ms. Smolyansky, currently Lifeway’s chair, president and CEO, said. “We are pleased to have this agreement in place as we enter this next chapter of growth.”
The litigation between the companies had centred on a shareholder agreement that Danone said Lifeway had breached with a share award to Ms. Smolyansky earlier this year. Lifeway said the shareholder agreement violated state law in Illinois, where the company is based.
As well as halting the litigation, the new co-operation deal between the two companies will see Lifeway agree to comply with the shareholder agreement that had been the source of the tension. Danone has agreed to waive certain rights, including its right to appoint a member of the Lifeway board.
The Actimel owner has also said it would not support the move to replace by Lifeway’s board if it is put forward before the end of June next year.
In July, Ludmila and Edward Smolyansky, the mother and brother of Julie, who are the company’s largest shareholders, submitted a “definitive consent statement” to the SEC, seeking to replace Lifeway’s board, including Julie, with nominees “focused on restoring accountability, transparency and long-term shareholder value”.
The move was the latest salvo in a long-running family dispute that has seen Ludmila and Edward publicly criticise how Julie was running the company.
Under the terms of Lifeway’s new deal with Danone, the three new candidates to join the US group’s board will be independent directors and “unaffiliated with Danone, Edward and Ludmila Smolyansky, Lifeway, or any current Lifeway officer or director”.
Director Pol Sikar will leave the board by Lifeway’s 2025 annual meeting. Jay Scher and one additional director will step down by the company’s 2026 annual meeting.
Just Drinks has asked Danone for comment and approached representatives for Ludmila and Edward Smolyansky for a reaction.
Danone referred this publication to its SEC filing on the agreement.
