Inside The Epic Battle Between Danone And Lifeway Foods—And Its Squabbling Founding Family

Forbes

The publicly traded kefir company Lifeway is fighting a takeover by the French dairy giant, its partner of more than 25 years. But for CEO Julie Smolyansky, the Ukraine-born daughter of Lifeway's founder, it’s personal—and her mom and brother are not on her side.  Read the full story on Forbes: https://www.forbes.com/sites/chloesorvino/2025/04/05/inside-the-epic-battle-between-danone-and-lifeway-foods-kefir-julie-smolyansky/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

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00:00Today on Forbes, inside the epic battle between Danone and Lifeway Foods and its squabbling

00:07founding family. Last September, Julie Smoliansky, the CEO of Kefir brand Lifeway Foods,

00:15saw an ominous email at 4 a.m. Chicago time from Danone, the French-based dairy giant that

00:20had first invested in her father's business back in 1999 and currently owns just under 25%.

00:26Danone was requesting a meeting in three hours. During the call, the executives revealed that

00:33they intended to buy a controlling stake in the NASDAQ-listed business, and they didn't seem to

00:37care much about what Smoliansky thought about it. Smoliansky says, quote, I didn't even get the

00:43courtesy of let's have lunch or let's talk. Smoliansky has run the fermented beverage business,

00:49a cousin of drinkable yogurt, since 2002 and, along with her mother and brother,

00:55controls some 45% of Lifeway's stock. She says, quote, I'm not going to be bullied. I'm not

01:01afraid. The phone call was the culmination of years of acrimony between Smoliansky and Danone,

01:09which Lifeway accuses of a host of nefarious behavior aimed at undermining the business,

01:13including blocking the Illinois-based company from expanding internationally

01:17and refusing to help it source cheaper raw ingredients. Smoliansky also believes that Danone

01:23used their seat on Lifeway's board to access competitive information and trade secrets

01:27after Danone acquired Wallaby yogurt in 2017. Danone denies these criticisms and says that Lifeway

01:34regularly utilized its right to shield information from its board representative,

01:38though Lifeway didn't know about the acquisition until it was announced publicly.

01:43Smoliansky contends that Lifeway has been hamstrung for decades by her father's 1999 agreement

01:48with Danone when the French company invested $6.5 million, or about $12 million in today's terms,

01:55for an initial 15% stake in the company. She insists that the agreement, and a, quote,

02:01support agreement, signed in conjunction, took advantage of her immigrant father's lack of a

02:06formal business education. She calls Danone, quote, predatory, and says she believes a Danone

02:12takeover could ruin the family business, and recipe, that she's fought so hard to preserve.

02:19Danone pushes back, responding that, despite the founding family's involvement in Lifeway,

02:24it must uphold the rights of all shareholders. A Danone representative tells Forbes, quote,

02:30Lifeway is a publicly owned company and not a family business. Lifeway sought Danone's investment,

02:35and without it, Lifeway would not be the company it is today.

02:38Following their September call with Smoliansky, Danone offered shareholders a full buyout at $25

02:45per share, a 19% premium over the share price. Lifeway's board, which is chaired by Smoliansky,

02:52rejected the offer. Two months later, Danone upped its bid to $390 million, or $27 per share.

03:01Lifeway's board also rejected that offer, maintaining that despite the hefty premiums,

03:05that those prices undervalued the business. Lifeway's only analyst, Ben Cleave at Lake Street

03:12Capital Markets, agrees, saying that, quote, a competitive bidding process would likely be

03:17well above. Deals for natural foods, Cleave notes, have commanded multiples of more than three times

03:24sales, and Danone's offers are less than two times. In early April, Lifeway's shares were trading

03:30around $24. Prior to the second bid, the Lifeway board agreed to a hostile takeover defense known

03:38as a poison pill, which gives existing shareholders the right to buy additional shares if any shareholder

03:43that owns more than 20%, like Danone, upped its stake, diluting any takeover attempt.

03:50The poison pill also prevents Smoliansky's mother Ludmilla and her brother Edward from selling their

03:56shares to Danone, the largest individual shareholder with nearly 23% ownership.

04:02Currently, Smoliansky owns nearly 18% of Lifeway shares, Edward owns nearly 21%, and Ludmilla owns 6%.

04:10Edward disputes his sister's total share count and believes more than 300,000 shares are invalid.

04:16The combined family stake had been over 50% for years, but fell under the threshold as shares have

04:23been sold. The family can only sell up to 2% of shares annually, according to the 1999 shareholder

04:29agreement. If they sell more, Danone has the right of first refusal. Danone disputes that its takeover

04:36attempts have been hostile. The $29 billion in 2024 revenue Dairy conglomerate filed a lawsuit last month

04:44in Illinois state court alleging that Lifeway violated its shareholder agreement with Danone by issuing

04:49about $7 million worth of shares to Smoliansky in December 2024. Lifeway filed a countersuit a few

04:57weeks ago. For full coverage, check out Chloe Sorvino's piece on Forbes.com. This is Kieran Meadows

05:06from Forbes. Thanks for tuning in.

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