Major Investor Criticises Lifeway Rights Plan Extension

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Lifeway Foods’ determination to widen its shareholder authorities scheme has drawn disapproval from investor Edward Smolyansky, who called nan move a “shield for management”.

The US kefir producer’s committee has approved a one-year hold to nan authorities scheme to 29 October 2026, leaving each different position unchanged.

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Lifeway adopted nan constricted long authorities scheme in November past twelvemonth aft turning down takeover liking from Danone.

Mr. Smolyansky, nan relative of Lifeway CEO Julie Smolyansky, said nan move was nan “most brazen illustration of committee and guidance entrenchment”.

“Lifeway’s determination to widen its poison pill for yet different twelvemonth isn’t astir protecting shareholders – it’s astir protecting control,” he posted connected LinkedIn connected Friday (31 October).

“Julie Smolyansky and nan existent committee look truthful paranoid astir losing moreover de facto power that they’ve efficaciously moved to artifact anyone – Danone aliases immoderate different investor – from accumulating a meaningful stake.”

Just Food has asked Lifeway to remark connected Mr. Smolyansky’s comments.

Announcing nan hold connected Wednesday, Lifeway said cited nan company’s “highly concentrated stock ownership” arsenic nan logic for nan board’s decision. Edward, alongside his mother, Ludmila, a small complete a 4th of Lifeway. Danone holds conscionable nether 23% of nan company.

Lifeway said connected Wednesday its committee believes nan institution “remains susceptible to nan acquisition of existent aliases de facto control by 1 aliases much shareholders without paying a power premium to different shareholders”.

The Lifeway committee besides “considered nan imaginable for a important number of shares to go disposable for waste successful nan adjacent word nether nan company’s existing agreements and registration obligations, which could summation nan likelihood of an accumulation of power without adjacent compensation to each shareholders”, nan institution added.

Nevertheless, Lifeway underlined that nan hold of nan authorities scheme is not linked to immoderate circumstantial takeover offer.

An investor successful Lifeway since 1999, Danone had tabled a takeover bid of $25 per stock for nan institution successful September 2024, sweetening nan connection to $27 per stock 2 months later.

Lifeway, which besides produces cheeses and a ProBugs statement for children, rejected some nan bids, saying they undervalued nan business.

Meanwhile, Mr Smolyansky’s disapproval of nan hold to nan authorities scheme comes against a backdrop of tensions betwixt nan 3 family members.

In July this year, nan mother-and-son duo, who are nan company’s largest shareholders, revenge a “definitive consent statement” pinch nan SEC to switch nan board, including Julie, pinch nominees “focused connected restoring accountability, transparency and semipermanent shareholder value”.

Danone had initially indicated it was considering whether to support nan consent solicitation, aft it decided to abandon its efforts to bargain nan business and research options for its liking successful nan US firm.

However, successful a connection connected 30 September, nan Activia shaper announced a multi-faceted agreement pinch Danone.

Under nan position of nan deal, Lifeway agreed to “refresh” its committee by appointing 4 caller directors. The institution besides said it would abstracted nan roles of chair and CEO, which person been held by Ms. Smolyansky. Lifeway and Danone besides agreed to “stay” nan litigation betwixt them.

The litigation betwixt nan companies had centred connected a shareholder statement that Danone said Lifeway had breached pinch a stock grant to Ms. Smolyansky earlier this year. Lifeway said nan shareholder statement violated authorities rule successful Illinois, wherever nan institution is based.

As good arsenic halting nan litigation, nan co-operation woody betwixt nan 2 companies saw Lifeway work together to comply pinch nan shareholder statement that had been nan root of nan tension. Danone has agreed to waive definite rights, including its correct to name a personnel of nan Lifeway board.

The French dairy elephantine besides said it would not support nan move to switch by Lifeway’s committee if it is put guardant earlier nan extremity of June adjacent year.

Just Food has approached Danone to remark connected Lifeway’s hold of nan shareholder authorities plan.