Lifeway Foods has declined an unsolicited buyout offer from Danone (OTCQX:DANOY) North America PBC, deeming the bid as undervalued and against the interests of its shareholders.
In response, the board of the Illinois-based dairy company adopted a shareholder rights plan to fend off the acquisition attempt, aimed at protecting shareholders from a low-premium takeover.
Danone, a French multinational with a 23.4% minority stake in Lifeway, had proposed acquiring the remaining shares at $25 per share.
In its filing with the US Securities and Exchange Commission (SEC), Lifeway Foods revealed that after consulting independent financial and legal advisors, its board rejected Danone’s offer, viewing it as an "opportunistic" move that "substantially undervalues" the company.
"The rights plan is intended to enable all shareholders to realize the full value of their investment in Lifeway," the company stated.
Under the new plan, Lifeway will distribute one preferred share purchase right for each outstanding common share to shareholders of record on November 18, 2024. The rights plan, effective immediately, is designed to deter Danone from acquiring a controlling stake without paying a control premium.
The rights issue limits Danone’s ability to gain control through open-market purchases, allowing the board time to "make informed judgments and take actions that are in the best interests of all shareholders and other stakeholders," the company noted.
Shares of Lifeway Foods were up around 0.9% by Tuesday afternoon.