After halting acquisition talks last month, kefir maker Lifeway Foods and Danone North America are back in good standing after entering a cooperation agreement, which will include an “orderly refreshment” of Lifeway’s board of directors.
As part of the agreement, Danone and Lifeway are both issuing stays on pending litigation against one another. Danone also agreed “not to act by written consent in favor of proposals” in the consent solicitation filed by Lifeway chairperson, president and CEO Julie Smolyansky’s family members, Edward and Ludmila Smolyansky, who have led efforts to unseat Julie from control of the company.
“Lifeway has always been about resilience, innovation, and community,” Smolyansky said in a statement. “This agreement allows us to move forward with clarity and stability, while continuing to focus on what matters most: bringing probiotic-rich foods to more families and creating value for our shareholders. We are pleased to have this agreement in place as we enter this next chapter of growth.”
Lifeway agreed that in the next six weeks it will appoint four new directors to its board who are independent under Nasdaq rules and who have been selected by the board’s existing Strategic Review Committee, with the first three to be selected by October 30.
These new members must be unaffiliated with Danone, Lifeway or any of its current officers or directors, or Edward and Ludmila Smolyansky.
The new board members will also be subject to Danone’s “good faith review and approval,” the company stated.
Additionally, current board members Pol Sikar and Jay Scher, the two longest serving members of the board, will step down in the coming months.
Lifeway has also agreed to separate its board chair and CEO roles. Julie Smolyansky will continue as CEO, but a new chair will be appointed by October 30.
The agreement also appears to diminish Edward and Ludmilla Smolyansky’s leverage as shareholders in Lifeway. In the event they call for a special meeting of shareholders or begin a consent solicitation to replace executives at any time before June 30, 2026, Danone agreed it will only vote in line with the board of directors’ formal recommendation.
The deal arrives after the will-they, won’t-they talks of an acquisition by Danone collapsed last month, with the French dairy giant withdrawing its interest in purchasing Lifeway.
Danone, which owns a 23% stake in Lifeway, had repeatedly attempted to acquire the business outright since last year, but it was initially rebuffed by Lifeway’s board – claiming the offers “undervalued” the company – before the kefir maker began to open up to the idea this summer and resumed negotiations.
The announcement does not say whether or not Danone may still be interested in restarting acquisition talks, but Lifeway has agreed to facilitate the public registration of Danone’s shares for sale, meaning that if Danone were to sell some or all of its shares of Lifeway common stock it will ‘consider in good faith a potential marketed offering of all or a portion of its shares”.
According to the press release, Lifeway is “in the process of evaluating capital allocation alternatives in light of these changes in order to maximize value for shareholders.”