Lifeway and Danone reach cooperation agreement on board changes

MORTON GROVE, Ill. - Lifeway Foods, Inc. (NASDAQ:LWAY), a $411 million market cap company with a "GREAT" financial health rating according to InvestingPro, announced Tuesday it has entered into a cooperation agreement with Danone North America PBC that will result in a significant board refreshment and stay pending litigation between the companies.

Under the agreement, Lifeway will appoint four new independent directors to its board by mid-November, with three to be added by October 30. The company, which maintains strong liquidity with a current ratio of 3.03 and zero debt, will also separate the Chair and CEO roles by October 30, with Julie Smolyansky continuing as CEO while an independent director will be appointed as Chair.

The agreement stipulates that long-serving board members Pol Sikar will step down before the 2025 annual meeting, while Jay Scher and another current board member will depart before the 2026 annual meeting.

As part of the deal, Danone has agreed not to support the ongoing consent solicitation filed by Edward and Ludmila Smolyansky. Danone will also waive certain rights under the Stockholders’ Agreement, including its right to appoint a board member.

Lifeway stated it is evaluating capital allocation alternatives to maximize shareholder value. The company also agreed to file a shelf registration statement by October 30, which would facilitate the potential sale of Danone’s shares if it decides to divest its stake.

"This agreement allows us to move forward with clarity and stability," said Julie Smolyansky, Lifeway’s current Chairman, President and CEO, according to the press release statement. The company has demonstrated solid performance with 9.19% revenue growth in the last twelve months, though InvestingPro analysis suggests the stock is currently trading above its Fair Value. For deeper insights into Lifeway’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The cooperation agreement comes amid ongoing litigation regarding Danone’s Stockholders’ Agreement with Lifeway, which will now be stayed. Evercore Group LLC is serving as financial advisor to Lifeway, with Sidley Austin LLP providing legal counsel.

In other recent news, Lifeway Foods Inc. has been in the spotlight following several key developments. The company announced that Danone S.A. has withdrawn its proposal to acquire Lifeway Foods, as confirmed by a regulatory filing. Despite this, Lifeway remains committed to enhancing shareholder value through its strategic plans and exploring new opportunities. In a move to boost production, Lifeway has completed the first phase of its expansion at the Waukesha, Wisconsin facility, aiming to double its production capacity.

Additionally, Lifeway Foods is set to launch a new protein drink, Muscle Mates, which includes 20 grams of protein, 5 grams of creatine, and 12 probiotic cultures, with nationwide distribution expected by year-end. The beverage will be available in Mixed Berry, Strawberry Banana, and Vanilla flavors. Lifeway has also relaunched its Basics Plus line of kefir and colostrum supplement shots, a product that first appeared nearly three decades ago, designed to support immune health and gut balance. These recent developments reflect Lifeway Foods’ ongoing efforts to innovate and expand its product offerings.

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