Lifeway Foods’ has hired advisers at Kroll to help the US kefir maker weigh up “strategic alternatives”.

In a statement published after Lifeway’s AGM, the company, which has faced shareholder criticism, insisted it is looking to “maximise value” for investors.

“We are always open to considering all available avenues to maximise shareholder value. While we are confident in the company’s current strategy, we are also committed to exploring strategic alternatives that might be in the best interests of all shareholders. Over the course of the past several months we have been considering potential options, and the hiring of Kroll represents the next step in this process. We will provide further updates as appropriate,” Lifeway said.

At the AGM yesterday (15 June), held against a backdrop of shareholder pressure on the business, Lifeway said investors had backed its slate of board nominees.

Last week, Kanen Wealth Management, which owns just over 4% of Lifeway, issued a stinging attack on the company and its management. It urged Lifeway to sell itself after not seeing the pursuit of previously agreed “strategic alternatives” and said it would support an alternative slate of board candidates put up by Ludmilla Smolyansky, the mother of CEO Julie.

Last month, Ludmilla, who owns just short of 35% of Lifeway with her son Edward, resigned from the board “due to a disagreement with the board about her opinions on the business and management”, according to an 8-K filing the company made with the SEC last month.

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Last week, David Kanen, KWM’s CEO, accused Julie Smolyansky of “mismanaging the business and not acting in the best interest of its shareholders” as well as the company’s profitability not reaching the levels that it should achieve.

Kanen wrote about the lack of profitability: “This has been proven by five years of revenue growth with minimal to no profitability and a stock price that has never reached above $8 in the last five years.”

He added: “We believe Lifeway’s core kefir brand can grow revenue significantly in the hands of a skilled management team and CEO who actually shows up to work daily. We need to be focused on profitability and scaling.

“The company has a significant catalyst with the price of milk (its core input) continuing to come down which will boost gross margins. Sadly, Julie has yet to boost its net profit margin. Even without milk prices coming down, there are other tailwinds we want to highlight which strengthen our case for the company to be better managed.”

The letter goes on to describe a “toxic work environment” at Lifeway and that Julie used company funds for personal purposes. However, Kanen admitted that this could not be proved.

In its AGM statement, Lifeway issued its response to the recent criticism by KWM.

“Lifeway has a highly qualified Board and management team that collectively possess the right skills and experience to continue driving positive performance and creating value for shareholders. Chief executive officer Julie Smolyansky and the entire leadership team are successfully executing our Lifeway 2.0 strategy to optimise growth, productivity and profitability,” the statement read.

“We are disappointed that KWM – an activist investor with a history of targeting companies and which in the past has had to apologise for breaching settlement agreements – has chosen to publicly attack Lifeway and our leadership. This is especially unfortunate given that KWM did not raise its concerns with us privately, despite our prior interactions with the firm’s principal. KWM’s recent letter is riddled with inaccuracies, mischaracterisations and blatantly false statements that demonstrate its ignorance of our business.”

It added: “As significant owners of the company – with combined ownership of 18% – the members of the Board are fully aligned with shareholders and collectively have more skin in the game than KWM. We will continue to represent the best interests of all shareholders.”

In Lifeway’s latest results, for the quarter ended 31 March 2023, net sales rose 11.2% year-on-year to $37.9m. The kefir company, which also makes cheese and probiotic oat milk, reported net income of $800,000 for the period.

In 2022, net sales reached $141.5m, marking an 18.9% year-on-year jump. However, net income for the year stood at $900,000, down from $3.3m the previous year.

Dairy giant Danone owns a 24% stake in Lifeway.