Lifeway founding shareholders urge sale of business to Danone

seekingalpha
22 Nov 2024

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Shares of Lifeway Foods (NASDAQ:LWAY) were jolted higher on calls for the company’s founders to consider a sale to France’s Danone or any other potential buyer.

Edward and Ludmila Smolyansky, who jointly own 29.7% of Lifeway (LWAY) stock, called on the board of directors to establish an independent committee to evaluate and negotiate a transaction with either Danone or any other interested party. Danone’s North American unit offered $27 per share for the company, a premium of 12.5% from the stock’s current price.

“Rather than negotiate with Danone in response to its generous proposal, Lifeway quickly rejected it outright,” Edward and Ludmilla Smolyansky said in a statement.

The mother and son are also increasing pressure on Julie Smolyansky, Ludmilla’s daughter and Edward’s sister, to step down as CEO. The two filed a consent statement with the U.S. Securities and Exchange Commission this past summer accusing Julie Smolyansky and the board of “failures of corporate governance that have harmed the business and its employees and driven poor financial results for shareholders,” and new leadership is needed to revitalize the drinkable kefir business.

The family feud has escalated with the Smolyansky’s demanding the Lifeway (LWAY) board preclude Julie Smolyansky’s husband, Jason Burdeen, the company’s chief of staff, from any involvement in evaluating Danone’s proposal given his partiality against a deal, as well as allowing the dissemination of all deposed transcripts from the lawsuits filed by Lifeway (LWAY) against the Smolyansky’s to be shared with shareholders to prove the board is “acting with due care and has been adequately informed.”

After rejecting Danone’s offer, Lifeway Foods (LWAY) adopted a limited duration shareholder rights plan, more commonly known as a poison pill, to prevent the hostile takeover of the company.

“After careful and thorough consideration, conducted in consultation with its independent financial and legal advisors, the Board determined that Danone's opportunistic proposal substantially undervalues Lifeway and is not in the best interests of the Company and its shareholders or other stakeholders,” Lifeway said in confirming the implementation of the poison pill.

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