Dive Brief:
- Danone is selling its stake in Lifeway Foods months after confirming it would no longer pursue an acquisition of the fast-growing kefir maker.
- The dairy giant, which controls 22.7% of Lifeway, told Food Dive in a statement that it entered an agreement to sell off its shares after "having explored all options regarding our existing holding."
- Danone has been a shareholder of Lifeway for more than two decades and has tried to acquire the kefir maker multiple times. Danone was considering yet another play at a potential takeover last fall, but abandoned the proposal to explore opportunities within its own brands.
Dive Insight:
Danone is ending a long and tumultuous relationship with Lifeway, which has been marked by tit-for-tat lawsuits and accusations that Danone engaged in "corporate bullying."
Lifeway has seen booming sales as demand grows for ingredients like protein and fiber, with the company recently surpassing $60 million in net quarterly sales for the first time. Kefir is a fermented dairy drink that contains more probiotics than yogurt, and the category is seeing strong demand connected to the rise of GLP-1 medications for weight loss.
As Lifeway's sales have grown, it has pushed back more vigorously against a potential Danone buyout. The company has also looked to nullify its original 1999 agreement with Danone, which the dairy giant recently leveraged in a lawsuit objecting to a decision issuing new shares to the embattled Lifeway CEO Julie Smolyansky.
In October, Danone agreed to pause the lawsuit as part of a relationship reset that also added four new independent directors. Danone also stated it would abandon its attempts to buy Lifeway, with media reports suggesting the dairy giant didn't believe the two companies could work together effectively.
Danone is now selling off its stake for $19.50 a share, far less than its 2024 offer to buy Lifeway for $27 a share.
“Following extensive discussions with Lifeway Foods, and having explored all options regarding our existing holding, we decided not to pursue the acquisition of the company," a Danone spokesperson said in a statement. "This decision does not change our strategic focus on delivering high quality, healthy plant based and dairy products to American consumers.”
Danone appears ready to scale its own kefir business as more consumers prioritize gut health. The company launched an Activia kefir in the U.K. in 2024, and has since expanded across Europe. Group Deputy CEO and CFO Juergen Esser said kefir products are "flying off the shelves" in a recent earnings call.
"It has been extremely well welcomed in the European markets," Esser said, "and we are rolling that out as fast as possible. But you will see that appearing also in other markets around the world. So we are very, very excited about it.”
