Danone stated that the decision to grant additional shares to Smolyansky reflects the board’s ongoing effort to prioritize the CEO’s “personal interests over those of the company and its other shareholders.” The food manufacturer argued that Lifeway has already squandered millions of dollars of shareholder funds on Smolyansky. Danone highlighted that Lifeway has allocated resources to support her litigation against her family, cover her “excessive” compensation package, and pay her husband a six-figure salary as her chief of staff. Furthermore, Danone noted that the issuance of new shares follows Lifeway’s amendment of the CEO’s employment agreement, which “lavishes Ms. Smolyansky with an excessive severance and other benefits that will further dilute public shareholders in any change-of-control transaction.”

“Given the increased likelihood of a company sale, the board appears to have approved a value-destructive gifting program for the CEO in clear violation of the Shareholder Agreement,” Danone asserted in its letter. Lifeway contends that the shareholder agreement with Danone is invalid as it allegedly contravenes Illinois state law. The company stated its intention to “pursue all available remedies to enforce Illinois law and nullify the agreement.” In contrast, Danone maintains that the contract is still valid and urged Lifeway to “rescind the improper” stock issuance.

In response to Danone’s unsolicited and opportunistic acquisition proposal, Lifeway indicated that it and its external advisors are reviewing the relationship between the parties to best safeguard the interests of the company and its shareholders. Danone, known for producing healthy dairy products, has a yogurt portfolio that includes probiotic-focused Activia and low-sugar Too Good yogurts. Integrating the rapidly growing Lifeway and its health-oriented offerings would enhance Danone’s already diverse product line. Additionally, Danone could leverage its global scale to further expand Lifeway’s product reach.

Lifeway’s portfolio of kefir and fermented probiotic products has seen substantial growth in recent years due to rising consumer interest in gut health, protein, and probiotics. The company has achieved 21 consecutive fiscal quarters of growth, with sales projected to rise from $94 million in 2019 to an estimated $185 million to $186.5 million in 2024. Lifeway stated that it rejected Danone’s offer because it “severely undervalues the Company,” adding that it does not oppose a sale if the price accurately reflects the value of its business. The Lifeway board continues to support its CEO, emphasizing that her leadership is essential to the success of the company’s standalone business plan.

Incorporating innovations like solaray calcium citrate into their product lines could further enhance Lifeway’s offerings, aligning with the growing consumer demand for health-focused products.