Founding Shareholders of Lifeway Foods Press for Independent Evaluation of Danone's Acquisition Offer

Smolyansky Family Calls for Special Committee at Lifeway Foods

In a pivotal move for Lifeway Foods Inc. (NASDAQ: LWAY), founding shareholders Edward and Ludmila Smolyansky, who control approximately 29.7% of the company's outstanding shares, have publicly called for the establishment of an independent committee to evaluate Danone's recent acquisition proposal. The offer, valued at $27 per share, has been dismissed outright by Lifeway's management, a decision that has raised eyebrows among significant stakeholders.

The Smolyanskys are pressing the Lifeway board to reconsider this approach, especially following Danone North America's intriguing proposition to acquire all outstanding shares that it does not already hold. Instead of addressing this proposal, the current management, led by CEO Julie Smolyansky and her spouse Jason Burdeen, has issued dismissive remarks about a potential sale, claiming it would jeopardize the legacy of the Smolyansky family. Such strong assertions are particularly worrisome considering the personal ties involved, and lead to questions about whether an impartial assessment of Danone's offer can truly be achieved under the current leadership structure.

The familial connections among Lifeway's executives raise significant concerns regarding potential conflicts of interest that could undermine ethical business practices. For instance, CEO Julie Smolyansky insists that the company will not be sold, even in the face of an attractive acquisition proposal. Furthermore, reports suggest that Burdeen implied a condition where a substantial share transfer would be necessary for the sale negotiations to even begin.

Amidst this backdrop of familial loyalty and management resistance to change, the Smolyanskys are calling on the Lifeway board to take the following actions:

1. Set Up an Independent Special Committee - The board should form a committee dedicated to negotiating the sale of the company, further empowering shareholders to have a say in such monumental decisions.
2. Limit Jason Burdeen’s Role - Given Burdeen's recognized partiality, the founding shareholders advocate for his exclusion from any discussions related to Danone's proposal.
3. Release Kroll’s Financial Reports - They also demand the disclosure of any financial evaluations made by Kroll, the firm hired to assist with exploring strategic alternatives, to ensure transparency.
4. Disclose Deposition Transcripts - Lastly, they would like the company to agree to the dissemination of deposition transcripts from lawsuits that the company has filed against them, allowing shareholders to judge management's adherence to fiduciary responsibility.

The turmoil in Lifeway Foods’ management resonates with a broader narrative of corporate governance struggles where the objectives of significant shareholders clash with entrenched management interests. The Smolyanskys argue that Lifeway has lost substantial value due to poor decision-making and a lack of corporate accountability, stating, “While the Company's value continues to erode, Julie is busy launching copycat Kefir drinks on other continents that will never see the light of day under her tenure.”

As market conditions fluctuate and potential buyers like Danone express interest, the call for an independent evaluation grows louder. Such an assessment could potentially offer Lifeway's shareholders a clearer understanding of the company's valuation and future prospects. With leadership and strategic direction under scrutiny, the next steps taken by Lifeway’s board will be critical not only for the company’s fate but for the interests of its shareholders.

In conclusion, the situation reflects a growing need for transparency and the reassessment of current management practices at Lifeway Foods. For the company to thrive amid competitive pressures and shareholder expectations, it may be essential for the board to embrace a model of governance that prioritizes stakeholder value over personal agendas. The Smolyanskys' calls for action may ultimately lead to changes that could rejuvenate Lifeway Foods and restore confidence among its investors.

For more details on this unfolding situation, visit LifeBackToLifeway.com.