Danone will pause litigation against Lifeway Foods and vote in favor of the company’s board, part of a sweeping agreement that comes just two weeks after the Oikos manufacturer said it was abandoning its year-long effort to buy the kefir maker.
Earlier this year, Danone sued Lifeway after objecting to its decision to issue new shares to CEO Julie Smolyansky, claiming Lifeway violated a quarter-century-old agreement that required Danone’s consent. Lifeway countersued, calling Danone’s claims invalid. Danone owns 22.7% of Lifeway's stock.
The new agreement brokers a truce, with both companies agreeing to pause litigation against each other over the matter.
Lifeway has agreed to appoint four new independent directors who are not affiliated with Danone, Lifeway, or Edward and Lucy Smolyansky, the CEO's brother and mother. The appointments will be subject to approval from Danone following a good-faith review.
Two of Lifeway's longest-serving board members will step down as part of the deal. The kefir company also plans to separate the chairman and CEO roles, with Julie Smolyansky remaining as the chief executive. An independent director will eventually serve as chairman.
Danone agreed to vote in favor of Lifeway's board of directors at the company's 2025 and 2026 annual meetings. The Illinois-based company has faced a proposal from Lucy and Edward seeking to oust the entire Lifeway board, including Julie.
“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,” Julie Smolyansky said in a statement.
Danone reiterated in a Securities and Exchange Commission filing that it is continuing to review its investment in Lifeway, including whether to sell any or all of the shares it owns. A spokesperson for Danone declined to comment beyond the SEC filing.
Last month, Danone said it was no longer interested in pursuing an acquisition of Lifeway Foods. At the time, Barrons reported that Danone decided not to move forward with a buyout because it didn’t believe the two companies could work together effectively.
