Lifeway Foods has hit back at the bid by critical investors to oust the kefir maker’s board, urging shareholders to ignore the “legally deficient” move.
The US business said the attempt by Edward and Ludmila Smolyansky to replace the company's board breaches regulations in Illinois, where Lifeway is based.
On Wednesday (2 July), the Smolyanskys – the brother and mother of Julie, Lifeway’s CEO – submitted a “definitive consent statement” to the US Securities and Exchange Commission (SEC), calling for a new board “focused on restoring accountability, transparency and long-term shareholder value”.
Edward and Ludmila collectively hold voting control over 23.2% of Lifeway's outstanding shares.
They argue Lifeway’s “circumstances demand bold, unprecedented action” as the board has “repeatedly disregarded shareholder feedback, failed to articulate a credible strategy and chosen to reward failure”.
Edward is a former executive and director of Lifeway, while Ludmila is a co-founder of the company.
Lifeway, however, has dismissed the effort as “legally deficient”, claiming it “violates Illinois law and the company's organisational documents”.
“Their statement purports to set a record date for their proposals, when they don't have a right to do so, and ignores the requirement that all shareholders entitled to vote receive proper notice of the proposed action prior to the taking of any action by written consent – and they have failed to do so,” the publicly listed company added in a statement issued yesterday.
Lifeway urged its shareholders to “disregard” the duo’s filing and any communications from them that contravenes legal requirements or the company’s charter and bylaws.
In its statement, the company also highlighted its performance, pointing to a 788% shareholder return over five years and a doubling of revenue from 2019 to 2024.
In the first quarter of 2025, Lifeway reported net sales of $46.1m, up 3.3% from the same period in 2024. The group’s net income was $3.5m, up 45.8% year on year.
In May, the company announced it was “on track” to achieve $45–50m in adjusted EBITDA for its 2027 financial year.
The firm said it is preparing for its 2025 annual meeting, with a proxy statement forthcoming, and may issue a consent revocation statement to counter Edward and Ludmila’s push.
Since 2022, the Smolyanskys have clashed over Lifeway.
In July 2024, Edward and Ludmila demanded Julie and most directors resign amid claims of mismanagement, filing to replace the board in August.
Danone, a 23% shareholder in Lifeway since 1999, offered $25 per share in September to buy Lifeway, a 59% premium, but Lifeway rejected it in November as undervalued.
A sweetened offer from the French giant of $27 per share, which was supported by Edward and Ludmila, was also rejected.
In December, Danone prepared a lawsuit over a 1999 agreement breach after Lifeway granted Julie some 300,000 shares.
In its defence, Lifeway claimed the agreement was void in January.
In March, Danone sued in Illinois, with a Lifeway filing a counterclaim alleging a “hostile takeover,” and Edward launching the campaign to replace the board.
