Danone No Longer Interested in Buying Lifeway Foods. What Could Happen Next.

Danone previously made two bids to acquire kefir maker Lifeway Foods. (Dreamstime)

Key Points

About This Summary

• Danone is no longer pursuing the acquisition of Lifeway Foods after entering an agreement for a potential buyout on Aug. 1.
• Danone, which owns about 23% of Lifeway, may offload its stake after Lifeway rejected offers of $25 and $27 a share last year.
• Lifeway stock plummets. Danone is considering how to vote in the company’s shareholder vote closing Sept. 30.

The French dairy company Danone is no longer seeking to buy kefir maker Lifeway Foods , according to a filing with the Securities and Exchange Commission.

The two companies had entered into an agreement on Aug. 1, to allow Danone to conduct due diligence for a potential buyout. But Danone, which already owns about 23% of Lifeway shares, squashed investors’ hopes for a swift sale.

In the SEC filing, Danone said it was exploring other options, which could include offloading all or part of its stake in Lifeway or retaining its full investment. Lifeway last year rejected two all-cash offers from Danone to acquire the company, for $25 and $27 a share, respectively.

Lifeway stock plummeted 21% to $26.58 on Thursday. Paris-listed shares of Danone were down 1%.

The French company opted against another bid for Lifeway because it doesn’t believe the two businesses would be able to work together effectively, according to a source familiar with the discussions. Several weeks of discussions revealed the pair wouldn’t be a strong “cultural fit,” they said.

Danone also believes the market has evolved since its initial offer in 2024 and wants to prioritize opportunities in its existing brands, the source added.

“With the distraction of Danone’s unsolicited proposal now behind us, we will continue to focus on executing our growth strategy to create value for all our shareholders, employees, partners and customers,” Lifeway said in a statement.

The company added that it “engaged extensively with Danone,” having formed a board special committee comprised solely of independent directors to oversee the process.

The SEC filing represented another twist in the yearslong power struggle within Lifeway’s founding family, which owns more than 40% of shares in the Morton Grove, Ill.-based company. As Barron’s detailed, co-founder Ludmila Smolyansky and her son Edward triggered a shareholder vote in July to oust the entire board. One of their opponents, Lifeway CEO Julie Smolyansky, is Ludmila’s daughter and Edward’s sister.

Danone agreed not to participate in the shareholder vote while exploring an acquisition. With a buyout off the table, however, Danone said it was still considering whether to vote for or against the proposal. Voting closes Sept. 30.

“We’re going to continue on with our path,” Edward Smolyansky told Barron’s, saying he would keep pushing for a change in management absent a sale to Danone or another buyer.

Write to Nate Wolf at nate.wolf@barrons.com