Danone is taking action against Lifeway Foods after its attempts to acquire the brand last year were rebuffed, with the French dairy giant’s North America division accusing Lifeway CEO and chairwoman Julie Smolyansky of running a “value-destroying gifting program.”
A letter dated December 30, 2024, authored by Danone North America president and CEO Shane Grant, claims that Smolyansky violated its 1999 Shareholder Agreement when the Lifeway board granted her 283,337 new shares of company stock in December without Danone’s approval. The move came after Lifeway rejected a September 2024 acquisition offer from Danone that was priced at $25 per share, and then rejected an improved offer in November priced at $27 per share, or around $306 million.
“Having seen the heightened potentiality of a sale of the company, the board has seemingly green-lit a value-destroying gifting program for the CEO in blatant violation of the Shareholder Agreement,” the letter reads.
Lifeway has countered that the Shareholder Agreement is invalid under Illinois law, and always has been. The acquisition proposals were rejected after an analysis by the company’s independent financial and legal advisors indicated Lifeway was being “severely undervalued,” according to a statement.
The case brings Smolyansky’s stewardship of the Chicago-based Lifeway brand, founded by her father, under further scrutiny. The Danone letter pointedly notes “this is not the first occurrence of the board allowing Ms. Smolyansky’s personal interests to trump those of the company and its other shareholders.” Lifeway, the letter reads, has “wasted millions of dollars of the shareholders’ money to support Ms. Smolyansky in her years-long litigation against her family,” while also paying Smolyansky compensation valued at 45% of Lifeway’s total reported net income in 2023. Her husband is also being paid a “six-figure salary” to serve as her chief of staff.
Lifeway’s CEO has also been accused of mismanagement by her mother Ludmilla Smolyansky and brother Edward Smolyansky, a former officer of Lifeway and its second largest shareholder, who together launched their own rival company and campaigned to force Julie Smolyansky’s termination earlier this year.
“Having ignored a 25-year-old contract for Ms. Smolyansky’s personal benefit, further litigation to the detriment of the other shareholders is forthcoming,” the letter reads.
This article has been updated.