Lifeway Foods signs cooperation agreement with Danone

Lifeway Foods Inc. (NASDAQ: LWAY) announced a cooperation agreement with Danone North America PBC that will result in board changes and resolve ongoing litigation between the companies.

Under the agreement, Lifeway will add four independent directors to its board by November 14, 2025. Three directors must be appointed by October 30, with a fourth following by the November deadline. The new directors will be selected by Lifeway's Strategic Review Committee and require Danone's approval.

The company will separate the roles of chairman and CEO by October 30, appointing an independent director as board chair. Julie Smolyansky will continue as CEO. Current board members Pol Sikar will step down before the 2025 annual meeting, while Jay Scher and another director will exit before the 2026 meeting.

The agreement includes a stay of pending litigation between Lifeway and Danone. Danone has agreed not to support proposals in an ongoing consent solicitation filed by Edward and Ludmila Smolyansky.

Danone will waive its right to appoint a board member and agreed to relinquish most stockholders' agreement rights if its ownership falls below 5% of outstanding shares. The company committed to vote with board recommendations on matters relating to board composition through June 30, 2026.

Lifeway will file a shelf registration statement by October 30 to facilitate potential public sales of Danone's shares. The company's compensation committee will be permitted to issue equity-based compensation to management members excluding Smolyansky and her relatives.

The Morton Grove, Illinois-based company produces kefir and fermented probiotic products. Lifeway stated it is evaluating capital allocation alternatives to maximize shareholder value following the agreement.

The full cooperation agreement will be filed with the Securities and Exchange Commission on Form 8-K, according to the company's statement.

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