Lifeway Foods Inc.'s board of directors rejected the unsolicited proposal made on Sept. 23 by Danone North America PBC to acquire all the shares of Lifeway that it does not already own for $25 per share.

"After careful and thorough consideration, conducted in consultation with its independent financial and legal advisors, the board determined that Danone's opportunistic proposal substantially undervalues Lifeway and is not in the best interests of the company and its shareholders or other stakeholders. In addition, in response to Danone's proposal and its substantial ownership position in the Company, the board adopted a limited duration shareholder rights plan, effective immediately," Lifeway revealed in a statement.

The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Lifeway. "The Rights Plan will reduce the likelihood that Danone gains control of Lifeway through open market accumulation or otherwise without paying all shareholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of all of the company's shareholders and other stakeholders," Lifeway stated.

The Rights Plan has similar provisions to those of other plans adopted by publicly held companies in comparable circumstances. Under the Rights Plan, Lifeway will distribute to its shareholders one preferred share purchase right for each outstanding share of Lifeway common stock to shareholders of record at the close of business on Nov. 18, 2024. Initially, these rights will not be exercisable and will trade with, and be represented by, the shares of Lifeway common stock.

"Lifeway remains focused on its strategic plan to bring kefir to more households while also expanding into adjacent categories. The company plans to continue to build on its strong momentum, as evidenced by recent financial results, and creating shareholder value. The board and management are committed to acting in the best interests of all shareholders and ensuring that they are able to realize the full potential value of their investment," Lifeway stated.

However, Edward and Ludmila Smolyansky, significant shareholders and members of Lifeway Foods' founding family, issued the following statement in response to the board's decision to reject the takeover offer:

"For nearly four decades, we have fostered Lifeway’s growth with carefully attention to what is best for the company’s future. Today, we strongly support Danone’s offer, which represents a substantial premium over Lifeway’s recent share price and reflects their confidence in the growing U.S. kefir market — a category we helped build from the ground up.  

"As we approach one of most significant and closely watched earnings releases in Lifeway’s history, we remain optimistic about the company’s potential and believe that Danone’s proposal presents a unique opportunity to enhance value for all shareholders.

"We encourage the Lifeway board to carefully and in good faith reconsider Danone’s offer and seize this opportunity to deliver lasting value to shareholders, employees, and consumers. The longer they wait, the more money they will leave on the table, to the detriment of all."