Lifeway insists that the investment agreement with Danone is “invalid”

Lifeway Foods has maintained the company’s shareholder agreement with investor – and suitor – Danone is “invalid”.

The kefir maker, a takeover target of Danone, has responded to claims by the French giant that it breached an investor deal between the two companies.

Late last month, Danone wrote to Lifeway alleging that the US company and its CEO, Julie Smolyansky, had breached an agreement dating back to the Activia maker’s investment in the company.

Danone said Lifeway’s decision to award Smolyansky nearly 300,000 shares breached the deal and the company warned that it was. Litigation preparation.

However, Lifeway insists that the agreement, which dates back to 1999, is invalid under Illinois state law, where the group is based. “A void agreement does not become valid simply because both parties abide by its terms for a period of time, no matter how long. The company intends to pursue all available remedies to enforce Illinois law and invalidate the agreement,” Lifeway said in a statement yesterday (Jan. 6).

In September, Danone, which already owns just over 23% of Lifeway, Proposed acquisition The rest works for $25 per share — a 59% premium over the stock’s three-month volume-weighted average price.

The path of life He declined the offer on November 5, arguing that the offer undervalued the company. Danone He grew up He offered it to $27 per share but that was also it It was rejected.

However, later in November, Lifeway said The board “did not oppose” the potential sale From the company.

In Danone’s letter to Lifeway’s board, executive vice-chairman Shane Grant said the company “belatedly acknowledged that it could not continue to avoid value-maximizing proposals, and acknowledged that it would be willing to consider a sale of the company.” “So far, Danone has not seen any convincing evidence that this is the case,” he said.

Grant added that awarding the shares to Smolyansky was a move to “destroy shareholder value and ignore Danone’s well-established contractual rights”.

“Having witnessed the increasing likelihood of a sale of the company, the Board appears to have greenlit a value-destroying gift program to the CEO in flagrant violation of the shareholder agreement.”

Lifeway continues to insist that Danone’s offerings for the business “severely undervalue” the group.

However, Lifeway said in its statement yesterday that its board “confirmed that it is not opposed to selling at a price that more accurately reflects the true value of the company.”

“Given Danone’s opportunistic and unsolicited offer to acquire Lifeway, the company and its external advisors are examining the relationship between the two parties and evaluating how best to protect the interests of the company and its shareholders.”

The story continues