Key Points:
- Danone has decided to no longer pursue an acquisition of kefir maker Lifeway Foods. The company is also reviewing options for its 23% stake in Lifeway, including a potential sale.
- Danone opted out of the buyout due to concerns about effective collaboration with Lifeway, according to Barrons. The focus will now shift to exploring opportunities within Danone’s existing brands.
- Danone had proposed acquiring Lifeway for $25 a share, which was later increased to $27. However, Lifeway rejected both offers, citing undervaluation by Danone.
Insights:
Danone, a long-time shareholder in Lifeway, had been considering a potential acquisition but has now decided against it. The companies had signed a confidentiality agreement for due diligence. Danone believes that the benefits of acquiring Lifeway may not justify the cost.
While kefir sales have been on the rise, Danone is focusing on its existing brands like Activia and Oikos in the dairy market.
Lifeway has expressed resistance to a Danone takeover, accusing the company of being a “toxic business partner” engaged in corporate bullying.
Lifeway remains committed to its growth strategy and recent success, despite the potential disruption caused by the failed acquisition.
The decision not to acquire Lifeway presents Danone with an opportunity to address internal leadership issues, potentially affecting the current CEO Julie Smolyansky.
Family dynamics within Lifeway also come into play, with a proposal to remove Julie Smolyansky and the board gaining traction.
With the acquisition off the table, Danone now has the freedom to vote its shares as it sees fit in relation to the proposed leadership changes at Lifeway.
Danone has yet to decide on its voting stance, as stated in its SEC filing.