By Nate Wolf

The French dairy company Danone will explore an acquisition of kefir maker Lifeway Foods for the third time in less than a year, according to a Securities and Exchange Commission filing.

The two companies entered into a confidentiality agreement Friday "to facilitate Danone's further review of a potential acquisition transaction." Last year, Lifeway rejected two all-cash offers from Danone to acquire the company, for $25 and $27 a share, respectively.

Lifeway representatives initiated discussions with Danone representatives in late June to "reset" the relationship and begin acquisition negotiations, the SEC filing said. The companies now have until Sept. 15, with the potential for a one-week extension, to reach a deal, though there is no guarantee that will happen.

Danone owns around 23% of Lifeway shares, having entered into a shareholder agreement with the Morton Grove, Ill.-based company in 1999.

Lifeway stock, which has lingered around $25 a share since news of Danone's first acquisition attempt in September, were up 6.7% to $26.90 in afternoon trading Friday. Shares of Danone, listed in Paris, were up 0.9% after hours.

"Lifeway's Board of Directors has acted and will continue to act in the best interests of its shareholders, including a sale of the company at a price that reflects a fair value of our business and brand," CEO Julie Smolyansky said in a statement to Barron's.

Lifeway has been the subject of a yearslong power struggle within its founding family, which owns more than 40% of the shares. As Barron's detailed this week , co-founder Ludmila Smolyansky and her son Edward are leading a shareholder vote to oust the entire Lifeway board. That includes the CEO, Julie Smolyansky, who is Ludmila's daughter and Edward's sister. That consent-statement solicitation, which is a vote that asks shareholders to approve an action outside of annual meetings, was scheduled to end Friday.

The pact between Danone and Lifeway restricts the French company's ability to remove Lifeway board members or participate in any consent solicitation until Sept. 15. Danone said in the SEC filing that it currently intends to vote in favor of Ludmila and Edward's proposal to replace the board if it can't agree to an acquisition by the Sept. 15 deadline.

Danone declined to comment. Edward Smolyansky told Barron's he now planned to leave the consent statement that had been scheduled to close Friday open for a period of time. He said he was pleased that it appeared Danone would support his effort.

Lifeway controls roughly 95% of the U.S. market for kefir, a tangy, cultured dairy drink rich in probiotics. Sales have almost doubled in the past five years to $186.8 million in 2024.

The kefir maker said last year that Danone's two offers substantially undervalued the business. The company also called the 1999 agreement with Danone anticompetitive and void because it wasn't unanimously approved by all shareholders.

Under the 1999 deal, Danone has the power to block the issuance of additional shares to Julie Smolyansky -- an ability it has exercised in recent years. Danone sued Lifeway and its board members in March, alleging they breached their fiduciary duty by issuing Julie around $6.5 million in shares without the French company's permission. Lifeway countersued.

It wasn't immediately clear whether Friday's confidentiality agreement and the potential negotiations would affect the lawsuits.

Write to Nate Wolf at nate.wolf@barrons.com

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August 01, 2025 15:07 ET (19:07 GMT)

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