Lifeway Foods expands on reasons for rejection of Danone’s acquisition proposal

Lifeway Foods (LWAY) provided additional information regarding the reasons that its board of directors rejected the revised unsolicited proposal made on November 15 by Danone (DANOY) North America to acquire all the shares of Lifeway that it does not already own for $27.00 per share. The board determined that Danone’s $27.00 per share proposal substantially undervalues the company. The board is not, however, opposed to the sale of the company at any price. Lifeway Foods is experiencing double-digit growth and believes it has sustained momentum with runway for significant long-term growth and margin expansion. This growth is being driven by an increasing recognition among consumers of the importance of the gut microbiome to overall health and the benefits of the naturally available high-quality protein and probiotics contained in kefir. Lifeway has achieved 20 consecutive fiscal quarters of year-over-year topline growth. Over the past five years, Lifeway achieved a total shareholder return of 788% as measured through September 23, 2024. From 2019 to 2023, annual revenue has grown from $94M to $160M, a 71% increase. ver that same five-year period, gross profit increased 92%. Lifeway forecasts annual Adjusted EBITDA to grow from $22M in 2023 to $45M$-50M in 2027. Based on the expected 2027 EBITDA range, the Danone proposal of $27 per share implies a very low multiple of ~7.5x – 8.5x EBITDA.