Danone Halts Litigation Against Lifeway Foods and Supports New Board
In a surprising turn of events, Danone has decided to pause its legal battle against Lifeway Foods and instead back the company’s board, marking a significant shift in their relationship following Danone’s recent decision to abandon its acquisition bid for the kefir manufacturer.
Earlier this year, Danone filed a lawsuit against Lifeway after raising objections to the issuance of new shares to Lifeway’s CEO, Julie Smolyansky. Danone claimed that this action violated a long-standing agreement that required Danone’s approval for such transactions. In response, Lifeway filed a countersuit, disputing Danone’s claims. Currently, Danone holds a 22.7% stake in Lifeway.
The new agreement between the two companies calls for a ceasefire in their legal disputes, with both parties agreeing to halt litigation against each other on this matter.
Changes in Lifeway’s Board Structure
As part of the agreement, Lifeway has agreed to appoint four new independent directors who have no affiliations with Danone, Lifeway, or Julie Smolyansky’s family members, Edward and Lucy Smolyansky. These appointments are subject to Danone’s approval following a thorough review process.
Additionally, two of Lifeway’s longstanding board members will step down as part of the deal. Lifeway also plans to separate the roles of chairman and CEO, with Julie Smolyansky retaining her position as CEO while an independent director will assume the role of chairman.
Support from Danone
As a show of support for Lifeway, Danone has committed to voting in favor of Lifeway’s board of directors at the company’s annual meetings in 2025 and 2026. This comes at a crucial time for Lifeway, as the company has been facing a proposal from Lucy and Edward Smolyansky to remove the entire Lifeway board, including Julie Smolyansky.
Julie Smolyansky expressed her satisfaction with the agreement, stating, “This agreement allows us to move forward with clarity and stability, while continuing to focus on what matters most: bringing probiotic-rich foods to more families and creating value for our shareholders.”
Danone has indicated that it is still evaluating its investment in Lifeway, including the possibility of selling all or part of its shares. A Danone spokesperson declined to provide further comments beyond the company’s recent Securities and Exchange Commission filing.
Notably, Danone announced last month that it has decided against pursuing an acquisition of Lifeway Foods. According to reports, Danone chose to abandon the acquisition due to concerns about the compatibility of the two companies.