Will Lifeway Foods sell? Danone raises offer in battle for probiotic leader

Lifeway Foods, Inc. (NASDAQ: LWAY), a leader in kefir and probiotic fermented dairy products, has confirmed receiving a revised, unsolicited acquisition proposal from Danone North America Public Benefit Corporation. The updated bid offers $27 per share in cash for all outstanding common stock not already owned by Danone. This marks an increase from Danone’s earlier offer of $25 per share, which Lifeway’s Board of Directors previously rejected on November 5, 2024, deeming it insufficient and not reflective of the company’s market value or potential.

In a filing with the U.S. Securities and Exchange Commission, Danone disclosed its current ownership of 23.3% of Lifeway’s outstanding shares, underscoring its strategic interest in expanding its stake in the probiotic market.

The revised proposal is now under review by Lifeway’s Board of Directors, which has committed to consulting with its financial advisor, Evercore, and legal counsel, Sidley Austin LLP, to assess the bid’s alignment with shareholder interests. Lifeway emphasized that its evaluation process would be consistent with its fiduciary duties, considering the best interests of stakeholders.

The latest offer from Danone arrives as the demand for probiotic and microbiome-focused products continues to grow, fueled by increasing consumer awareness of gut health and immunity. Lifeway Foods has capitalized on this trend with its flagship kefir products, which are distributed across key global markets, including the United States, Mexico, and France. Its ProBugs range, targeted at children, and an expanding cheese product line, further showcase the company’s innovative approach to functional nutrition.

Despite the allure of Danone’s $27-per-share offer, Lifeway’s previous rejection of a lower bid highlights the Board’s confidence in its long-term strategy. Industry experts suggest that Lifeway’s significant brand equity and its foothold in the health-conscious dairy market make it an attractive acquisition target. Analysts point out that Danone’s revised offer reflects the company’s growing urgency to consolidate its position in the high-growth probiotic segment.

While shareholders are not required to take action at this stage, the proposal could signal broader consolidation trends in the dairy and probiotic industries. If successful, the acquisition would expand Danone’s already robust presence in the global fermented food and beverage sector.

Lifeway reiterated its stance that updates on the proposal would be provided only as legally required, maintaining a cautious approach to communication during the negotiation process.

This development underscores the strategic value of the probiotic beverage market, with companies like Danone looking to secure leadership positions in an increasingly competitive landscape. Whether Lifeway’s Board accepts this revised offer remains to be seen, but the evolving story has the potential to reshape the probiotic industry’s future.