MORTON GROVE, Ill. - Lifeway Foods, Inc. (NASDAQ: LWAY), a leading supplier of kefir and fermented probiotic products, has declined Danone (EPA:DANO) North America PBC's revised takeover bid of $27.00 per share. The Board of Directors at Lifeway believes the offer significantly undervalues the company, despite not being averse to a sale at a fair price.
The company's Board conducted a thorough review of Lifeway's standalone plan and concluded that its prospects for growth could provide greater value to shareholders than the proposal from Danone. Lifeway has reported 20 consecutive fiscal quarters of year-over-year top-line growth and a 788% total shareholder return over the past five years, outpacing both its sector peers and the S&P 500.
With annual revenues increasing from $94 million in 2019 to $160 million in 2023, the company has experienced a significant 71% growth and a 14% cumulative annual growth rate. Moreover, gross profit has grown by 92% during this period, with Operating Income and Adjusted EBITDA reaching $17 million and $22 million respectively in 2023.
Lifeway's management highlights the company's momentum with core kefir products, new product lines, and operational efficiency programs as key drivers for profitability. The company forecasts its annual Adjusted EBITDA to rise to between $45 million and $50 million by 2027. According to the Board, Danone's offer represents a substantially low multiple of approximately 7.5x to 8.5x EBITDA, not accounting for potential synergies and operational efficiencies a strategic acquirer could achieve.
The Board reiterates its commitment to act in the best interests of all shareholders and stakeholders, ensuring they realize the full potential value of their investment. Financial advisory services are provided to Lifeway by Evercore, and Sidley Austin LLP is the legal counsel.
Lifeway Foods, recognized as one of Forbes' Best Small Companies, is the number one kefir brand in the U.S. and has seen significant growth due to the rising consumer awareness of gut microbiome health benefits.
This report is based on a press release statement from Lifeway Foods, Inc.
In other recent news, Lifeway Foods has rejected a revised acquisition offer from Danone North America PBC. The proposal suggested purchasing all outstanding shares of Lifeway for $27.00 each, a proposition that Lifeway's Board of Directors unanimously deemed as undervaluing the company. This decision follows Lifeway's reported 20th consecutive quarter of growth, with notable revenue increases and improved profit margins. Lifeway's strategic plan includes expanding the presence of its kefir products and exploring adjacent categories to continue its growth trajectory.
In financial news, Lifeway Foods has reported a significant increase in net sales for the third quarter of 2024, marking its 20th consecutive quarter of sales growth. The company announced a 12.7% increase in net sales over the same period in 2023, reaching $46.1 million. This growth is largely attributed to the popularity of its flagship drinkable kefir, which saw a 22% sales increase year-to-date. Lifeway's gross profit margins improved to 25.7% for the quarter, supported by strategic investments in sales and marketing.
These are recent developments that underline Lifeway's commitment to delivering high-quality, nutritious products and sustaining its growth momentum. The company's expansion plans include new product introductions and increased distribution in international markets. The next update on the company's performance will be provided during the year-end call.
InvestingPro Insights
Adding to Lifeway Foods' impressive growth story, recent InvestingPro data reveals that the company's revenue growth remains strong at 18.27% over the last twelve months as of Q3 2023. This aligns with the company's reported consecutive quarters of top-line growth mentioned in the article.
The company's financial health appears robust, with InvestingPro Tips indicating that Lifeway "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors support the Board's confidence in rejecting Danone's takeover bid and pursuing a standalone growth strategy.
Lifeway's profitability is also noteworthy, with an operating income margin of 10.38% in the last twelve months. This solid performance is reflected in the InvestingPro Tip that the company has been "profitable over the last twelve months."
The market seems to be recognizing Lifeway's potential, as evidenced by the "strong return over the last three months" and "large price uptick over the last six months" noted in the InvestingPro Tips. In fact, the company's YTD price total return stands at an impressive 79.83%, underscoring the Board's assertion that the company's growth prospects could provide greater value to shareholders than Danone's offer.
It's worth noting that InvestingPro has 10 additional tips available for Lifeway Foods, which could provide further insights into the company's financial position and market performance. Investors interested in a more comprehensive analysis may find these additional tips valuable in assessing Lifeway's potential as a standalone entity.
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