The announcement of an acquisition proposal is driving up the value of Lifeway Foods, Inc. (NASDAQ: LWAY) shares today. LWAY shares were trading 22.79% higher at $26.40 as of the most recent market check. A regulatory document revealing that Lifeway received a non-binding takeover proposal from longtime shareholder Danone SA is what caused the stock price to rise.
Danone submitted an acquisition proposal to Lifeway.
At present, Danone, a prominent player in the food market worldwide, has a 23.4% share in Lifeway Foods. Danone offered to buy the remaining shares it does not hold for $25 in cash per share as part of its takeover offer. By offering financial and operational support, the proposal indicates Danone’s ambition to deepen its integration with Lifeway and create new development potential.
Previous Valuation Concerns
The acquisition proposal follows earlier concerns raised by Kanen Wealth Management regarding Lifeway’s valuation. Kanen said last year that the present leadership of Lifeway was limiting the company’s potential and that the stock was undervalued. The research firm argued in favor of a sale, stating that the business might fetch a price per share of $15 to $20, which would be significantly more than its market price of $7 at the time.
Danone’s Vision for LWAY
Danone’s proposal emphasizes the potential synergies between the two companies. By combining Lifeway with Danone’s resources, including innovation, distribution, and marketing expertise, Lifeway could achieve greater growth. Danone expressed confidence that its financial strength, with more than €2.0 billion in cash reserves as of June 2024, would enable it to fund the acquisition without relying on external financing.
Additionally, Danone believes the acquisition could provide Lifeway shareholders with immediate liquidity at a premium value. The proposal arrives amid internal conflicts at Lifeway, where a family dispute involving the CEO and major shareholders has intensified calls for a sale, with allegations of mismanagement looming over the company’s leadership.
