Key takeaways
- Danone North America withdrew its proposal to acquire Lifeway Foods, Inc. after conducting due diligence, leading to uncertainty in Lifeway’s leadership.
- Lifeway’s board previously rejected Danone’s two acquisition offers, despite Danone being its largest investor.
- Internal family and shareholder disputes have arisen, with Ludmila and Edward Smolyansky supporting Danone’s takeover plans and seeking to replace Lifeway’s board, including CEO Julie Smolyansky.
- The potential for Danone to support Edward Smolyansky’s board replacement plan remains undecided as part of the dairy major’s ongoing review of investment alternatives.
- But the future of Julie Smolyansky’s leadership hangs in the balance, with Danone’s decision likely to influence the outcome.
Danone North America has walked away from acquiring Lifeway Foods, Inc., plunging the US kefir company’s leadership into uncertainty.
The two companies signed an NDA in August to enter talks behind closed doors after Danone’s previous two takeover attempts were rebuffed by Lifeway’s board.
Danone is Lifeway’s largest investor and offered to acquire the firm’s outstanding shares twice in the span of 12 months: for $283m and $307m. Both offers failed to meet the valuation of the kefir company’s board, which is helmed by CEO Julie Smolyansky.
But Smolyansky’s leadership has come under fire by her relatives and long-term shareholders Ludmila and Edward Smolyansky, who back Danone’s takeover plans. The duo wants to change Lifeway’s entire board of directors, including Julie as CEO, and launched a consent solicitation process in July to force this through.
As Danone and Lifeway sought to break the deadlock again this summer, the dairy major flexed its muscle in the NDA: should the talks collapse again, the company would back Edward’s plan to replace the Lifeway board. Collectively, Danone (22.7%) and Edward and Ludmila (27.4%) hold 50.1% of Lifeway shares.
On September 17, Danone decided to withdraw its acquisition proposal after due diligence.
“We are now in the process of reviewing alternatives for our investment in Lifeway,” the company said in a statement filed with the SEC. “As part of this review of alternatives for our investment in Lifeway, we are also reviewing whether to vote the shares of Common Stock we own in favor of Edward Smolyansky’s proposals set forth in his pending consent solicitation statement to replace the entire Lifeway Board of Directors, and we have not yet made a final decision in this regard.
“As part of our review, we may in the future take such actions with respect to our investment in Lifeway as we deem appropriate, including, without limitation, selling all or part of our investment in Lifeway, continuing to hold our investment in Lifeway or changing our intention with respect to any and all matters referred to in Item 4 of Schedule 13D.”
Timeline
September 23, 2024: Danone submits a bid of around $283m ($25.00 per share in cash) for Lifeway Foods, Inc's outstanding shares. Edward Smolyansky, who supported the transaction, said the offer represented 'a substanial premium over Lifeway's recent share price'.
November 5, 2024: Lifeway's board rejects the bid as 'opportunistic'.
November 15, 2024: Danone North America puts in a revised proposal of around $307m ($27.00 per share in cash).
November 26, 2024: Lifeway turns down Danone's second bid, stating that the offer implies 'a very low multiple of around 7-8.5 times this expected EBITDA range'.
July 2, 2025: Edward and Ludmila Smolyansky initiate a consent solicitation process to remove Lifeway's entire board.
August 5, 2025: Danone and Lifeway return to the negotiating table and sign an NDA to pursue a deal.
September 17, 2025: Talks collapse, again: Danone withdraws after due diligence review.
Lifeway responded by saying it remains ‘firmly committed to driving value for Lifeway shareholders by executing our strategic plan and continuing to explore value enhancing opportunities’.
The company has recorded favorable sales performance recently, but the news of a third failed takeover has sent its shares plunging nearly 20% in the past five days.
In Q2 2025, Lifeway Foods outperformed analyst expectations with an EPS surprise of 3.7% and a revenue surprise of 7.8%.
Revenue increased 18% to $53.9m with a volume-led growth, with EPS $0.28, up from $0.26 vs YA. Gross profit margin increased by 160bps YoY, a 28.6% increase; and net income rose to $4.2m versus $3.8m vs YA. Lifeway aims for $45m-50m in adjusted EBITDA by fiscal year 2027.
In the first two months of Q3 (through August 31), Lifeway recorded $39.1m in unaudited net sales, a 20% year-over-year increase, the company’s board said in a statement.
The brand released a raft of functional dairy offerings this year, the most recent being a range of functional beverages that contain protein, creatine and probiotics.
It is also expanding its production footprint with plans to double its capacity in Waukesha, Wisconsin.
One question now remains: will Julie Smolyansky’s leadership survive again, or is a changing of the guard inevitable? The outcome of that may well be up to Danone.
