Lifeway Foods’ decision to extend its shareholder rights plan has drawn criticism from investor Edward Smolyansky, who called the move a “shield for management”.
The US kefir producer’s board has approved a one-year extension to the rights plan to 29 October 2026, leaving all other terms unchanged.
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Lifeway adopted the limited duration rights plan in November last year after turning down takeover interest from Danone.
Mr. Smolyansky, the brother of Lifeway CEO Julie Smolyansky, said the move was the “most brazen example of board and management entrenchment”.
“Lifeway’s decision to extend its poison pill for yet another year isn’t about protecting shareholders – it’s about protecting control,” he posted on LinkedIn on Friday (31 October).
“Julie Smolyansky and the current board appear so paranoid about losing even de facto control that they’ve effectively moved to block anyone – Danone or any other investor – from accumulating a meaningful stake.”
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By GlobalDataJust Food has asked Lifeway to comment on Mr. Smolyansky’s comments.
Announcing the extension on Wednesday, Lifeway said cited the company’s “highly concentrated share ownership” as the reason for the board’s decision. Edward, alongside his mother, Ludmila, a little over a quarter of Lifeway. Danone holds just under 23% of the company.
Lifeway said on Wednesday its board believes the company “remains vulnerable to the acquisition of actual or de facto control by one or more shareholders without paying a control premium to other shareholders”.
The Lifeway board also “considered the potential for a substantial number of shares to become available for sale in the near term under the company’s existing agreements and registration obligations, which could increase the likelihood of an accumulation of control without fair compensation to all shareholders”, the company added.
Nevertheless, Lifeway underlined that the extension of the rights plan is not linked to any specific takeover offer.
An investor in Lifeway since 1999, Danone had tabled a takeover bid of $25 per share for the company in September 2024, sweetening the offer to $27 per share two months later.
Lifeway, which also produces cheeses and a ProBugs line for children, rejected both the bids, saying they undervalued the business.
Meanwhile, Mr Smolyansky’s criticism of the extension to the rights plan comes against a backdrop of tensions between the three family members.
In July this year, the mother-and-son duo, who are the company’s largest shareholders, filed a “definitive consent statement” with the SEC to replace the board, including Julie, with nominees “focused on restoring accountability, transparency and long-term shareholder value”.
Danone had initially indicated it was considering whether to support the consent solicitation, after it decided to abandon its efforts to buy the business and explore options for its stake in the US firm.
However, in a statement on 30 September, the Activia maker announced a multi-faceted agreement with Danone.
Under the terms of the deal, Lifeway agreed to “refresh” its board by appointing four new directors. The company also said it would separate the roles of chair and CEO, which have been held by Ms. Smolyansky. Lifeway and Danone also agreed to “stay” the litigation between them.
The litigation between the companies had centred on a shareholder agreement that Danone said Lifeway had breached with a share award to Ms. Smolyansky earlier this year. Lifeway said the shareholder agreement violated state law in Illinois, where the company is based.
As well as halting the litigation, the co-operation deal between the two companies saw Lifeway agree to comply with the shareholder agreement that had been the source of the tension. Danone has agreed to waive certain rights, including its right to appoint a member of the Lifeway board.
The French dairy giant also said it would not support the move to replace by Lifeway’s board if it is put forward before the end of June next year.
Just Food has approached Danone to comment on Lifeway’s extension of the shareholder rights plan.
