Founded by Michael Smolyansky in the 1980s, Lifeway Foods has been run by his daughter Julie as CEO since Michael's death in 2002, while Ludmila (Julie’s mother) serves as chair of the board (her consulting contract with the company was terminated at the end of last year).
Julie's brother Edward was COO until January 4 and FoodNavigator-USA understands he was terminated for cause.
The first public signs that the Smolyansky family members - who have a controlling stake in the business - were not on the same page, emerged February 25 in a 13D form filed with the SEC in which Ludmila and Edward argued that Julie should be replaced as CEO, and that the board should explore “strategic alternatives.”
The independent directors of the Lifeway board responded with a statement saying that they fully supported Julie Smolyansky, who stressed that her “loyalty lies with our company, our brand, our customers, our employees, our shareholders, and my father’s legacy."
Edward and Ludmila Smolyansky agree to withdraw their director nominations ahead of AGM
In a statement released this morning, the firm says Lifeway’s board will nominate Julie Smolyansky and Ludmila Smolyansky, Juan Carlos Dalto, Jodi Levy, Dorri McWhorter, Perfecto Sanchez, Jason Scher, and Pol Sikar for election at the August 31 AGM.
Edward and Ludmila have in turn agreed to withdraw their director nominations and vote all of their shares in favor of Lifeway's nominees at the AGM.
As part of the agreement, the audit and corporate governance committee of the Lifeway board will “oversee a review of strategic alternatives for the company.”
‘A nationally recognized financial advisor to assist with the exploration of strategic alternatives’
In the firm’s 8-K filing with the SEC this week, it further explains that, “The Audit and Corporate Governance Committee shall engage a nationally recognized financial advisor to assist it with the exploration of strategic alternatives. The Company shall provide notice to Mrs. Smolyansky of all meetings and other proceedings of the ACG Committee (or any other committee or subcommittee of the Board) related to such exploration.”
VP comms Derek Miller told FoodNavigator-USA: "Lifeway is always exploring opportunities to increase shareholder value and grow the company. Our executive leadership team is excited to be in alignment with our board of directors and major stakeholders, and we’re looking forward to a great second half of 2022 and beyond."
"Lifeway has been a pioneering force in the natural foods world for more than 35 years; we are proud of our history and excited for our future," added Julie Smolyansky in a statement.
Who owns Lifeway Foods?
According to SEC filings, Ludmila owns a 21.9% stake, Edward owns 16%, and Julie owns 13.2% in Lifeway Foods, which is listed on NASDAQ as LWAY.
The other major shareholder in the company is Danone, which owns around 22% of Lifeway, giving it significant leverage in any negotiations regarding a possible sale.
While the fermented dairy beverage kefir still accounts for the vast majority (80%) of its sales, Lifeway Foods has expanded its portfolio in recent years, with cheese now accounting for 11% revenues in 2021.
Sales in the year to December 21, 2021 were up 16.7% year-over-year to $119.1m.
Read more about Lifeway's recent performance HERE.