Although milk alternatives have increased in popularity over the years, dairy continues to be a popular food group and a very profitable industry worldwide.
Milk production is projected to grow at an average rate of 1.7% by 2030, which is faster than most agricultural consumption products.
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This high demand for dairy products is what continues to fuel multiple companies across the globe.
According to the Global Dairy Top 20 rankings for 2023, Danone is the fourth most prominent leader in the dairy industry, with a market capitalization of $49.53 billion.
The French dairy giant Danone (GPDNF) has made a name for itself internationally by owning multiple household staple brands that are popular worldwide, including Activia, Oikos, and Silk.
According to Danone’s Q2 earnings report for 2024, net sales increased by 4% on a like-for-like basis, net income was up by 2.6%, and EPS increased by 2.6% compared to last year.
With such a successful business, it is no surprise that the dairy giant may want to buy out other smaller competitors, but this time, Danone may have chosen a company with troublesome ownership.
Danone is well-known in the dairy industry
A tumultuous family feud that could reach its end
Lifeway Foods (LWAY) is an American food company that has been a leading supplier of kefir and fermented probiotic products in the U.S.
Although Lifeway Foods is a successful business, its founders have struggled to reconcile their differences, which has broken up a once-strong family bond.
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The family that founded Lifeway Foods has had a long-standing feud with the company’s current CEO, Julie Smolyansky, who is also a member of the company’s founding family.
For years, Ludmila and Edward Smolyansky, the mother and brother of the current CEO, have accused her and the company’s Board of Directors of mishandling business at Lifeway Foods.
According to a consent statement filed by the mother and brother with the U.S. Securities and Exchange Commission on Aug. 20, they are demanding a change in leadership at the company as part of their “Back to Lifeway” campaign.
The campaign seeks the complete removal of the company’s current Board of Directors and CEO in the best interest of the business, employees, and shareholders. It claims they have harmed the company by repeatedly overseeing multiple grave corporate governance failures.
“Under my sister Julie’s authority, Lifeway has been on autopilot for far too long, missing critical market opportunities due to a lack of strategic vision. It’s time for a fresh approach to leadership that prioritizes growth and innovation over personal agendas,” said Edward Smolyansky, former COO of Lifeway Foods.
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However, despite some of the founding family’s claims of failure in the company’s handling by its CEO and team, Lifeway Foods seems to be doing well for itself.
According to Lifeway Food’s Q2 earnings report for 2024, net sales were up by over 25%, and a net income increased by over 17% compared to the year prior.
The American company’s earnings per share (EPS) also exceeded analysts’ expectations by 25% in the same quarter.
Danone makes an offer that could add fire to an already turbulent family feud
On Monday, Danone submitted a regulatory filing offering to buy Lifeway Foods for $25 per share.
This offer would be a 59% premium to Lifeway Food’s three-month average price of $15.74 at the time of the filing.
Although they occupy the same industry, the two dairy-focused food companies have a long relationship with each other.
Danone has been a shareholder of Lifeway Foods for over 20 years, owning 23.4% of its common shares.
As of Monday’s Market Closing, Lifeway Food’s stock was at $21.50 per share, with a market cap of $318 million, which still made the offer in the regulatory filing higher than its current price.
However, that didn’t last long, as the stock was up nearly 24% as of Tuesday’s market open, closing the day $26.57 each.
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