Lifeway Foods Refutes Danone’s Claims, Deems Investor Agreement Void
In a bold move, Lifeway Foods has rejected Danone’s allegations that it breached their investor agreement, instead claiming that the agreement is invalid under Illinois state law. This development comes after Danone, which already owns 23% of Lifeway, proposed acquiring the remaining shares of the company for $25 per share, a 59% premium over the stock’s three-month volume weighted average price.
A History of Dispute
The dispute between Lifeway and Danone dates back to 1999, when Danone invested in the company. However, Lifeway insists that the agreement is void and has no legal standing. “An agreement that is invalid does not become valid simply because both parties follow its terms for a period of time, no matter how long,” Lifeway stated.
Danone’s Concerns
Danone, on the other hand, claims that Lifeway’s decision to award CEO Julie Smolyansky nearly 300,000 shares breached the agreement. Danone’s deputy CEO, Shane Grant, accused Lifeway of “destroying shareholder value and ignoring Danone’s long-established contractual rights.” Grant also expressed skepticism about Lifeway’s willingness to consider a sale of the company.
Lifeway’s Response
Lifeway has maintained that Danone’s offers undervalue the company and has reiterated its commitment to protecting the interests of its shareholders. The company’s board has stated that it is not opposed to a sale, but only at a price that accurately reflects Lifeway’s true value. In a statement, Smolyansky said, “Danone is opportunistically determined to push through an inadequate offer, and in the meantime, Lifeway has continued to execute on its strategy and is delivering substantial value for shareholders.”
Financial Performance
Lifeway has reported unaudited preliminary net sales of $45.1m to $46.6m for the fourth quarter of last year, a significant increase from the previous year’s $42.1m. The company forecasts its net sales for 2024 to be in the range of $185m to $186.5m, compared to $160.1m in 2023.
Family Feud
The dispute between Lifeway and Danone has also been complicated by a family feud between Smolyansky and her mother and brother, who hold a combined stake of nearly 30% in the company. The family members have backed Danone’s moves to acquire Lifeway, sparking a legal dispute between the Smolyanskys.
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