Lifeway says Danone’s latest offer ‘undervalues’ firm, but board not opposed to a sale

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Dive Brief:

• Lifeway Foods’ board said Danone’s $27 per share proposal “substantially undervalues” the business but that the kefir and fermented probiotic products maker is not “opposed to the sale of the Company at any price.”
• The board said Lifeway has a “strong potential to provide superior value to all shareholders as compared to Danone’s revised proposal.” Danone declined to comment.
• Danone increased its offer to buy the remaining stock it doesn’t already own in Lifeway on Nov. 15. The dairy giant previously offered $25 a share in September. Danone currently owns 23.3% of Lifeway’s common shares. 
  
   

Dive Insight:

Lifeway’s acknowledgment that it’s willing to at least entertain an offer is likely a negotiating tactic to elicit a higher bid from Danone or another unnamed party. Lifeway uses much of its latest press release to comment on the takeover offer while pointing out its recent successes and the future prospects of the company.

Lifeway’s board noted that it has posted 20 consecutive fiscal quarters of year-over-year revenue growth and it has increased sales from $94 million in 2019 to $160 million a year ago. The company also called attention to the fact that its double-digit growth exceeds much of the dairy and food space and that its products are benefitting from consumer interest in gut health, protein and probiotics. 

“As Lifeway’s strong historical financial results indicate, the Company has sustained momentum with runway for significant long-term growth and margin expansion,” Lifeway said in its statement. The dairy maker said Danone’s $27 per share bid is too low even before taking into account “substantial synergies and additional operational efficiencies that Danone (or another strategic acquirer) could realize.”

The takeover bids come as Lifeway has been embroiled in a bitter family dispute between the CEO and her relatives. Edward and Ludmila Smolyansky, the brother and mother of Lifeway CEO Julie Smolyansky, last week called for the company to create an independent special committee to evaluate and negotiate a transaction with Danone or other potential buyers. The family members outlined “significant personal conflicts [that] call into question the CEO’s ability to fairly evaluate Danone’s proposal in accordance with her fiduciary duties.”