Lifeway Foods, Inc., a leading U.S. supplier of kefir and fermented probiotic products that support the microbiome, announced a cooperation agreement with Danone North America PBC. 

Subject to the terms and conditions, Lifeway agreed to carry out an orderly refreshment of its board of directors and the pending litigation pertaining to Danone's Stockholders' Agreement with Lifeway will be stayed.

Additionally, Danone has agreed not to act by written consent in favor of proposals contained in the ongoing consent solicitation filed by Edward and Ludmila Smolyansky, among others, and to support the board's recommended director candidates at the 2025 and 2026 annual meetings.

As part of the agreement:

• Refreshment of the Lifeway Board – Lifeway's Board will appoint one more director who is, independent under Nasdaq rules, selected by the Board's Strategic Review Committee (which is solely comprised of Lifeway independent directors) and unaffiliated with Danone, Ed and Lucy Smolyansky, Lifeway and any current Lifeway officer or director, subject to Danone's good faith review and approval. In addition, to promote good governance practices while preserving the benefits of board continuity through an orderly board refreshment process, Pol Sikar will step down from the board before the company's 2025 annual meeting of shareholders, and Jay Scher and another current member of the board will step down before the company's 2026 annual meeting of shareholders.
• Lifeway will separate the chair and CEO roles, consistent with good corporate governance practices, and appoint an independent director to serve as chair of the board. Julie Smolyansky will continue in her role as CEO of the company.
• Lifeway and Danone agreed to jointly stay pending litigation.
• Lifeway agreed to comply with the Stockholders' Agreement without contesting or admitting its validity, and Danone has agreed to waive certain rights under the Stockholders' Agreement, including its right to appoint a member of the Board. In addition, Danone has agreed to waive and not to enforce any of its rights under the Stockholders' Agreement (except for books and records rights), if Danone and its affiliates no longer own at least 5% of the number of shares of Lifeway common stock currently outstanding.
• Lifeway has agreed to file a shelf registration statement by October 30, which would facilitate the public registration of Danone's shares for sale, if Danone decides to sell shares of Lifeway common stock. Danone has agreed that, if it determines to sell its stake in Lifeway, it will consider in good faith a potential marketed offering of all or a portion of its shares of Lifeway's Common Stock.

In addition, Lifeway is in the process of evaluating capital allocation alternatives in light of these changes in order to maximize value for shareholders.

"Lifeway has always been about resilience, innovation, and community. This agreement allows us to move forward with clarity and stability, while continuing to focus on what matters most: bringing probiotic-rich foods to more families and creating value for our shareholders,” said Julie Smolyansky, Lifeway's chairman, president and CEO.” We are pleased to have this agreement in place as we enter this next chapter of growth."

About Lifeway Foods, Inc.
Lifeway Foods, Inc., which has been recognized as one of Forbes' Best Small Companies, is America's leading supplier of the probiotic, fermented beverage known as kefir. In addition to its line of drinkable kefir, the company also produces a variety of cheeses and a ProBugs line for kids. Lifeway's tart and tangy fermented dairy prducts are now sold across the United States, Mexico, Ireland, South Africa, United Arab Emirates, and France.