LIFEWAY FOODS REJECTS REVISED UNSOLICITED PROPOSAL FROM DANONE

Rhea-AI Summary

Lifeway Foods (NASDAQ: LWAY) has rejected Danone North America's revised unsolicited proposal to acquire all remaining shares for $27.00 per share. The Board determined the offer substantially undervalues the company. Lifeway recently achieved its 20th consecutive quarter of growth, with double-digit year-over-year revenue growth and improved profit margins in Q3 2024. The company has delivered total shareholder returns of 788% and 270% over five and three years respectively, outperforming peers and the S&P 500. Management remains focused on executing its strategic plan to expand kefir market presence and enter adjacent categories.

Positive

• 20 consecutive quarters of growth achieved
• Double-digit year-over-year revenue growth in Q3 2024
• Improved profit margins in Q3 2024
• 788% shareholder returns over 5 years
• 270% shareholder returns over 3 years
• Outperformance compared to food and beverage peers and S&P 500

Negative

• None.

Insights

M&A Analyst

The rejection of Danone's $27.00 per share offer represents a significant strategic decision by Lifeway Foods. The company's strong performance metrics provide solid ground for this rejection: 20 consecutive quarters of growth, impressive shareholder returns of 788% and 270% over five and three years respectively and recent double-digit revenue growth with improved margins.

Danone's offer appears opportunistic, coming at a time when Lifeway has demonstrated substantial operational momentum in the growing functional beverage market. The kefir producer's expansion strategy and market positioning in the probiotic segment suggest potential for continued value creation beyond the proposed acquisition price. The board's decision indicates confidence in the company's standalone growth trajectory and ability to capture more market share in the expanding functional beverage space.

Market Research Analyst

The decision highlights Lifeway's strong position in the rapidly growing functional beverage market. Their sustained growth trajectory in the competitive probiotic products sector demonstrates effective market penetration and brand strength. The company's successful expansion strategy and consistent performance metrics suggest they're effectively capitalizing on increasing consumer demand for gut health products.

The rejection of Danone's bid, despite its significant market presence in the dairy sector, indicates Lifeway's management sees greater value in maintaining independence to pursue their growth strategy. Their track record of outperforming both peers and the S&P 500 validates this confidence, suggesting potential for continued market share expansion and value creation through independent operations.

MORTON GROVE, Ill., Nov. 20, 2024 /PRNewswire/ -- Lifeway Foods, Inc. (NASDAQ: LWAY) (the "Company"), a leading U.S. supplier of kefir and fermented probiotic products to support the microbiome, today announced that its Board of Directors has rejected the revised unsolicited proposal made on November 15, 2024 by Danone North America PBC ("Danone") to acquire all the shares of Lifeway that it does not already own for $27.00 per share.

After careful and thorough consideration, conducted in consultation with its independent financial and legal advisors, the Board determined that Danone's revised proposal substantially undervalues Lifeway and is not in the best interests of the Company and its shareholders or other stakeholders.

Lifeway remains focused on executing its strategic plan to bring kefir to more households while also expanding into adjacent categories. The Company recently delivered its 20^th consecutive quarter of growth, posting double-digit year-over-year revenue growth and improved profit margins in the third quarter of 2024. Over the past five and three years, the Company has delivered total shareholder returns of 788% and 270%, respectively, (as measured through September 23, 2024, the last full trading day before Danone's initial unsolicited proposal was publicly disclosed) far outperforming other high growth food and beverage peers as well as the S&P 500.

The Company plans to continue to build on its strong momentum to unlock additional 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.

Evercore is serving as a financial advisor to Lifeway and Sidley Austin LLP is serving as legal counsel to Lifeway.

About Lifeway Foods, Inc. 
Lifeway Foods, Inc., which has been recognized as one of Forbes' Best Small Companies, is America's leading supplier of the probiotic, fermented beverage known as kefir. In addition to its line of drinkable kefir, the company also produces a variety of cheeses and a ProBugs line for kids. Lifeway's tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland, South Africa, United Arab Emirates and France. Learn how Lifeway is good for more than just you at lifewayfoods.com.

Forward-Looking Statements 
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, plans or expectations for our business, operations, financial performance or condition.  These statements use words such as "continue," "believe," "expect," "anticipate," "plan," "project," "estimate," "outlook," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could." You are cautioned not to rely on these forward-looking statements. These forward-looking statements are made as of the date of this press release, are based on current expectations of future events and thus are inherently subject to a number of risks and uncertainties, many of which involve factors or circumstances beyond Lifeway's control. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from Lifeway's expectations and projections. These risks, uncertainties and other factors include: price competition; the decisions of customers or consumers; the actions of competitors; changes in the pricing of commodities; the effects of government regulation; possible delays in the introduction of new products; customer acceptance of products and services; and other factors discussed in Part I, Item 1A "Risk Factors" of Lifeway's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Part II, Item 1A "Risk Factors" of Lifeway's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. Lifeway expressly disclaims any obligation to update any forward-looking statements (including, without limitation, to reflect changed assumptions, the occurrence of anticipated or unanticipated events or new information), except as required by law.

Contacts:
Derek Miller
Vice President of Communications, Lifeway Foods
Email: derekm@lifeway.net

OR

Longacre Square Partners
Joe Germani / Miller Winston
Email: LWAY@longacresquare.com

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SOURCE Lifeway Foods, Inc.

FAQ

What was Danone's offer price per share for Lifeway Foods (LWAY)?

Danone offered $27.00 per share to acquire all remaining shares of Lifeway Foods that it does not already own.

Why did Lifeway Foods (LWAY) reject Danone's acquisition offer in November 2024?

Lifeway's Board determined that Danone's revised proposal substantially undervalued the company and was not in the best interests of the company and its shareholders.

What was Lifeway Foods' (LWAY) shareholder return over the past five years?

Lifeway Foods delivered a total shareholder return of 788% over the past five years, as measured through September 23, 2024.

How many consecutive quarters of growth has Lifeway Foods (LWAY) achieved?

Lifeway Foods has achieved 20 consecutive quarters of growth, with double-digit year-over-year revenue growth in Q3 2024.