This voice is automatically generated. Please let us know if you have any feedback.
Diving overview:
- Dairy giant Danone has increased its offer to acquire the remaining shares it does not already own in kefir product maker Lifeway Foods Inc. to approximately $307 million, or $27 per share. According to regulatory filings. Danone initially offered to pay about $283 million, or $25 a share, in September. Danone currently owns 23.3% of Lifeway’s common stock.
- In a letter to Lifeway CEO Julie Smolyanski:Danone said it was “disappointed” by the board’s initial reaction to the previous proposal. The company noted that the price increase “fully reflects our fundamental potential.”
- Lifeway has benefited greatly from growing consumer demand for healthier products through its kefir, a yogurt-like milk drink, and fermented probiotic products. Lifeway announced its net sales this week. Revenue for the quarter ended Sept. 30 was $46.1 million, an increase of $5.2 million from the same period last year. This marks the company’s 20th consecutive quarter of year-over-year growth.
Dive Insight:
As Danone looks to expand its portfolio of healthy dairy products and bring further growth to its portfolio, the addition of Lifeway will definitely help it achieve both of these goals. However, as is common in M&A, Lifeway demanded a price increase after rejecting Danone’s initial offer.
The new price represents a $2 per share increase, but it remains to be seen whether that will be enough to satisfy Lifeway. In a statement released late Friday afternoonLifeway said it will “carefully consider and evaluate the proposed amendments and determine the course of action that it believes is in the best interests of the Company, its stockholders and other stakeholders.”
Danone has been a shareholder in Lifeway for over 20 years and knows Lifeway better than anyone. The fact that it owns nearly a quarter of the company’s stock makes it unlikely that Lifeway will receive new offers from buyers other than Danone.
“We continue to believe lifeway Through our combination with Danone, we have an attractive opportunity to unlock the full potential of listed companies, removing the constraints and additional resources required. Lifeway’s size,” Danone said in the letter. “We welcome the opportunity to discuss this latest proposal and next steps with you.”
The proposed acquisition comes as Lifeway is embroiled in a bitter family dispute between its CEO and his relatives. In a letter earlier this month, Edward Smolyansky and Ludmila Smolyansky, Julie Smolyansky’s brother and mother, said they “strongly supported” Danone’s initial proposal and urged the board to ” “We must seize the opportunity to deliver lasting value for our shareholders, employees and consumers.”
“We encourage the Lifeway Board of Directors to reconsider Danone’s proposal carefully and in good faith,” Edwards and Lyudmila said in a statement. “The longer you wait, the more money is left on the table, to the detriment of everyone.”
Last year, Kanen Wealth Management said Lifeway stock was undervalued and that with the board and CEO in place, it couldn’t fully realize its price. The company asked Lifeway to consider a sale. Since then, Lifeway stock has increased 225%, according to the company.
Update: Story has been updated with comment from Lifeway regarding the new offer from Danone.
