Lifeway Foods “not opposed” to sale despite rejecting Danone’s revised takeover offer

Lifeway Foods’ board of directors has announced that the US-based kefir supplier is open to other takeover offers after rejecting Danone’s revised proposal to acquire all the company shares it does not own for US$27 per share. 

The board notes that the dairy multinational’s current offer “substantially undervalues” the company. It maintains that Lifeway Foods is “not opposed” to the sale of the company at any price.

Danone has been a long-time shareholder of Lifeway. According to a Schedule 13D amendment filed with the US Securities and Exchange Commission, Danone owns approximately 23.4% of Lifeway’s outstanding common stock beneficially.

The Illinois-based company’s management believes that the maker of fermented probiotic products has reached an “inflection point” with its position in the kefir market.

Additionally, according to the board, the company’s operational efficiency programs have contributed to enhanced profitability, which will continue to improve.

Danone’s disappointment

The French dairy giant initially proposed to buy Lifeway for US$25 a share in cash to enable the company to “achieve its full potential.” The kefir maker rejected the proposal, terming the offer “opportunistic.”

The rejection led to Danone raising the takeover offer earlier this month to US$27 per share, representing a 72% premium over the three-month volume-weighted average price of Lifeway’s shares.

Danone’s deputy CEO, Shane Grant, wrote to Lifeway chair, president and CEO Julie Smolyansky at the time, expressing “disappointment in the board’s response to the initial proposal.”

Grant said: “We continue to believe Lifeway has an attractive opportunity to achieve its full potential through a combination with Danone, removing the constraints and additional resources required for a publicly listed company of Lifeway’s size.”