The relationship between long-standing business partners Danone and Lifeway Foods Inc. has soured in recent years.
The kefir manufacturer – in which Danone holds a stake of around 23% – resisted multiple acquisition attempts from Danone as it felt the dairy major’s offers came short of the company’s true market potential.
In 2024, Danone tabled £283m and £307m to acquire the outstanding shares in the company – including those of the CEO’s estranged relatives and shareholders, Edward and Ludmila Smolyansky – but was turned down.
In 2025, Danone filed a lawsuit against Lifeway, claiming breaches of the original shareholder agreement, and then threatened to side with the Smolyanskys who had launched a consent solicitation process to force a leadership change at Lifeway.
Later that summer, the two companies re-opened acquisition talks, but Danone pulled out following due diligence. Finally, in late 2025, the companies called a truce by signing a cooperation agreement, setting out a board overhaul, a pause to the lawsuit, and a potential exit route for the French multinational.
But while tensions have de-escalated, the strategic rationale for Danone’s continued involvement may be exhausted.
Why Danone is likely to exit Lifeway
Already last year, Danone was ‘reviewing alternatives’ for its Lifeway stake, including reducing or selling it fully. The cooperation agreement signed between the two companies in late 2025 also lays the groundwork of an eventual Danone exit.
Notably, the French multinational has given up key control rights, such as having a board seat and a say over certain management pay decisions. Relinquishing this level of control is the strongest sign that an exit is on the cards.
The agreement also spells out that Danone’s obligations under the original Stockholders’ Agreement will cease once its stake shrinks to a certain level; and features a mutual non-disparagement clause, to last until two years after Danone fully exits.
Danone vs Lifeway: A 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'.
March 2025: Danone files a lawsuit against Lifeway, alleging shareholder agreement breaches.
July 2025: Edward and Ludmila Smolyansky initiate a consent solicitation process to remove Lifeway's entire board.
August 2025: Danone and Lifeway return to the negotiating table and sign an NDA to pursue a deal.
September 2025: Talks collapse, again: Danone withdraws after a due diligence review.
October 2025: The two business partners sign an agreement under which Danone relinquishes key controls, including a board seat.
Lifeway meanwhile has agreed to file a ‘shelf’ registration that covers all shares owned by Danone and its affiliates – paving the way for the dairy group to sell its shares when market conditions allow (though there are limits on how much can be sold at once for market stability reasons).
The lawsuit that Danone filed a year ago over alleged shareholder agreement breaches has also been paused. The suit, details of which were revealed through a Danone SEC filing, were equalled to corporate bullying by Lifeway, who called the French multinational ‘toxic’.
Danone won’t be exiting Lifeway quickly – but based on the facts listed above, a gradual reduction in its stake with the view of a full exit is now much more likely than another acquisition attempt.
Why independence may suit Lifeway better
For Lifeway, a separation from its long-term business partner would perhaps also be welcome.
The kefir and cultured dairy company has been squeezed financially by the saga: Lifeway’s administrative expenses rose $2.16 million year over year in 2025, with around 80% of this increase down to Danone-related legal and professional fees.
This is a drag on profitability at a time when the company is winning on the market: Lifeway’s FY25 saw an increase in net income ($13.9m vs $9m), record-high net sales ($212.5m vs $186.8m) and nearly 20% jump in gross profit despite an increase in COGS. It also reiterated its long-term target of $45–$50m in adjusted EBITDA for FY2027.
CEO Julie Smolyansky told investors that focus remains on “expanding distribution, driving innovation and delivering consistent, profitable growth as we build on our leadership in the fermented dairy space”.
The company has blended its cultured dairy knowhow with high-protein, weight management and gut health trends, allowing it to thrive among competitors that are much better-resourced in terms of commercial and marketing might. From probiotic butter to lactose-free performance RTD, the company is positioning itself to serve the GLP-1 user cohort as well as everyday health-conscious consumers.
Regulation is also working in Lifeway’s favour: the 2025-2030 Dietary Guidelines for Americans explicitly mentions that fermented foods including kefir may be beneficial for health.
Danone and Lifeway compete in the same space, and for now, carry on as business partners, too. But after more than a year locked into power struggles, their paths are likely to diverge: and from a market and product innovation perspective, that may ultimately be a win.
