Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and tim Stenoveek on Bloomberg Radio.
Speaker 1: I want to bring back Julie Smolanski. She's CEO of
Speaker 1: Lifewave Foods. She's been on with us in the past. Well,
Speaker 1: I've spoke to her back in December. The company LifeWay Foods.
Speaker 1: You might know it if you're a listener, if you're
Speaker 1: a viewer, or if you've been to a grocery store
Speaker 1: because to three hundred fifty million dollar market cap. They
Speaker 1: make keifer and farm cheese, so you might have seen
Speaker 1: their products on the shelves. They reported earnings earlier this week, Tuesday,
Speaker 1: they came out with the numbers. The market reaction was
Speaker 1: on Wednesday, share surged to hire by more than fourteen
Speaker 1: and a half percent. The company reported a forty four
Speaker 1: percent year every year increase in earnings per share, Net
Speaker 1: sales up three point three percent year over year, and
Speaker 1: it was the twenty second quarter of consecutive growth under
Speaker 1: Julie's leadership. Julie joins us once again from Los Angeles. Julie,
Speaker 1: there's a lot to talk about. I mentioned that you
Speaker 1: were on with us back in December to discuss the
Speaker 1: company rejecting an unsolicited offer, a takeover offer by Denown
Speaker 1: North America. What is the status of the back and
Speaker 1: forth now between the two companies.
Speaker 2: Well, we are in.
Speaker 3: Court and we are working to defend this hostile takeover.
Speaker 3: It's a classic David and Goliath story. But you know this,
Speaker 3: their offer farly undervalues the company, and we're fighting for
Speaker 3: all shareholders and we know that we're at the tipping
Speaker 3: point right now. We have, you know, a strong balance
Speaker 3: sheet and we're not a distressed company. So you know,
Speaker 3: we feel that the offer is really undervalues us, and
Speaker 3: we feel that the reason why they think that they
Speaker 3: can take us over in a hostile manner are the
Speaker 3: very contract that we're disputing is invalid. It's against Illinois
Speaker 3: state law. All shareholders did not agree to it, and
Speaker 3: uh it gives a minority shareholder control over management and
Speaker 3: board decisions. So we believe that the Cook County courts
Speaker 3: will side with us. And this situation is really unprecedented,
Speaker 3: and you know, we're fighting against the largest B corp
Speaker 3: in the world who's behaving like an activist. It's it's
Speaker 3: unprecedented Uh, and it's not something we typically see in
Speaker 3: the natural food industry at a time when you know,
Speaker 3: other companies are being valued at exceptional rates. We just
Speaker 3: saw Poppy being acquired by Pepsi for a billion two
Speaker 3: billion dollars. You know, we're in the probiotic space. We
Speaker 3: have a lot of science behind our product. Uh, in
Speaker 3: two thousand years of history. This is not a fad,
Speaker 3: This is not a trend. This is a two thousand
Speaker 3: year old staple product that my ancestor is, my great
Speaker 3: great grandparents, grandmothers, you know, developed and protected and you know,
Speaker 3: my father brought Keefer to America and he pioneered this
Speaker 3: and we pioneered this. LifeWay is the premier keyfer company
Speaker 3: in the world, and so it's no surprise to me
Speaker 3: that they want to steal us. But you know, I'm
Speaker 3: going to make sure that all shareholders benefit from a
Speaker 3: good value of our company, one that we know and
Speaker 3: you know we're on targets to strong, continued, strong performance.
Speaker 1: Well, I do want to say you sent a message
Speaker 1: out on social media earlier saying that you would be
Speaker 1: on our program. A little later, you cause said you
Speaker 1: were going to defend LifeWay. Kafir against corporate raiders and bullies,
Speaker 1: and you called it shameful when the largest B corporation
Speaker 1: in the world behaves like greedy hedge funds. Denone did
Speaker 1: send us a response to that, a lengthy response. I'm
Speaker 1: going to read from it and get your reply. It says,
Speaker 1: in part, Julie Smolansky's out delegations against denown are false
Speaker 1: and detached from reality. There's no raid or hostile bid
Speaker 1: since LifeWay's board decided in November twenty twenty four to
Speaker 1: reject Denown's highly attractive twenty seven dollars per share acquisition proposals,
Speaker 1: depriving LifeWay shareholders of a very significant premium. Denote has
Speaker 1: been a major shareholder in LifeWay for more than twenty
Speaker 1: five years and is defending a legally binding shareholder agreement.
Speaker 1: The statement continues to say, the only greed demonstrated here
Speaker 1: is by miss Molansky at the expense of LifeWay's public shareholders.
Speaker 1: How do you respond to that?
Speaker 3: I think the language speaks for that's for themselves, for itself.
Speaker 2: You know this shareholder agreement is illegal.
Speaker 3: Many lawyers have looked at it, as well as Illinois
Speaker 3: legislators have looked at it and have all agreed it's illegal, improper,
Speaker 3: and it harms LifeWay, it harms the public at large,
Speaker 3: It benefits nobody but Danin and it we believe it's void,
Speaker 3: and the courts will you know, will work through that
Speaker 3: in the courts. But you know, they themselves are on
Speaker 3: the record is saying that they're going to make a move,
Speaker 3: that they're making a move on Keifer in the United States.
Speaker 3: They have already christened their hostile takeover by example of
Speaker 3: their photograph on the front page of their annual report
Speaker 3: with Activia Keifer. They already have shared their plans and
Speaker 3: that those plans are to wipe us off the face.
Speaker 2: Of the earth and get rid.
Speaker 3: Of our brand and take over the space. You know,
Speaker 3: they're in enable to grow organically on their own, so
Speaker 3: they do this with This is a standard operating procedure
Speaker 3: for them, and you can see that by the debacle
Speaker 3: of their Horizon takeover, their their White Wave takeover, their
Speaker 3: Wallaby takeover. They have a history of corporate rating and
Speaker 3: I don't think farmers in America or our community here
Speaker 3: in America or around the world, you know, is going
Speaker 3: to benefit from such actions.
Speaker 2: And we will continue to defend them and I'm not
Speaker 2: going to be bullied.
Speaker 1: We're speaking with Julie Smolanski, CEO of a Lifewave Food.
Speaker 1: She's also chairperson the board and president of the company.
Speaker 4: Julia, I'm wondering if there is a price that is
Speaker 4: fair for potentially a merger, would you be open to
Speaker 4: that if the price was right, and what would it be.
Speaker 3: We are open to any offer that makes sense for
Speaker 3: all shareholders, that values the company in a proper way,
Speaker 3: in a way that also looks at the potential and
Speaker 3: the growth. When there is a tipping point right now
Speaker 3: in food and they know it, which is why they're
Speaker 3: trying to take this over and steal.
Speaker 2: This because they know it. We own ninety five percent.
Speaker 3: Of the most hottest global categories in the world. Kiefer
Speaker 3: is the subject of intense science and research studies all
Speaker 3: around the world. Just recently a couple of months ago
Speaker 3: out of Boston, they did a long, long study of
Speaker 3: over thirty years that followed one hundred and thirty thousand
Speaker 3: people and found that people who consumed probiotic fermented dairy
Speaker 3: foods like found in LifeWay Keefer were able to reduce
Speaker 3: coalon cancer by twenty to thirty percent. This is groundbreaking research.
Speaker 3: We also know that Keifer can help prevent ADHD. We've
Speaker 3: seen research showing that we have seen the mind gout
Speaker 3: access and the way that Keifer can help reduce stress,
Speaker 3: depression and anxiety through the vegas nerve. There is a
Speaker 3: skin gut access. We know that Keifer's beneficial to the skin.
Speaker 3: This is just science and research back so you know
Speaker 3: in the GLP one conversation, just to throw that one,
Speaker 3: and we have a high quality, bioavailable protein product loaded
Speaker 3: with calcium nutrients that people want.
Speaker 1: We only have a couple of minutes left, so a
Speaker 1: lot of potential. We only have a couple of minutes left.
Speaker 1: So I want to jump in here. Emily did ask
Speaker 1: you what the price would be. Remember Danone offered twenty
Speaker 1: seven dollars per share in their acquisition proposal. They called
Speaker 1: it highly attractive. What number is fair to you?
Speaker 2: I'm not going to name a number.
Speaker 3: The board and the you know consultants, the investment bankers
Speaker 3: and the board will have that determination. But I can
Speaker 3: tell you you could look at some of the recent
Speaker 3: transactions and the valuations there and I'll name Poppy Simple Mills,
Speaker 3: of which LifeWay was an early investor in and we
Speaker 3: benefited greatly from But take a look at the Simple
Speaker 3: Mills valuations, take a look at Lesser Evil, take a
Speaker 3: look at rx bar and these organics. I mean, I
Speaker 3: can continue to name other companies in MySpace and the
Speaker 3: valuations that are there. That is, I am absolutely disagree
Speaker 3: that they are offering an attractive offer. They're offering an
Speaker 3: offer that only benefits to non and the again, the
Speaker 3: contract is illegal.
Speaker 2: Let's run a fair process, you know.
Speaker 1: I do want to touch a little bit and some
Speaker 1: of the other points that Denon made in their argument.
Speaker 1: This idea that compensation they note, accounts for more than
Speaker 1: potential compensation, rather would account for more than all of
Speaker 1: life waste net income. How would you respond to that?
Speaker 1: They say, together with the severance and retention figures.
Speaker 3: I mean, I feel that that's the pot calling the
Speaker 3: cattle black. I would say, take a look at their compensation.
Speaker 3: I mean I think that you know, there's I mean,
Speaker 3: I think everyone deserves to be compensated fairly, and my
Speaker 3: team is no different than their team.
Speaker 1: Let's switch gears a little bit. I think we covered
Speaker 1: this latest and I know this will be ongoing very
Speaker 1: briefly before we switch gears. When do you anticipate this
Speaker 1: to be out of the courts and they're there to
Speaker 1: be a decision?
Speaker 2: Oh, I can't predict what the court's timeline is. You
Speaker 2: know that that's up to the courts.
Speaker 1: You think it'll be years though.
Speaker 2: I can't. I don't have a crystal.
Speaker 1: Bonding o idea. Okay.
Speaker 3: I know that we're going to continue to control what
Speaker 3: we can control, which is continue to build the business.
Speaker 2: That's what I'm focused on. Well, let's talking the category.
Speaker 1: Let's talk a little bit about that because last time
Speaker 1: you were on you spoke a lot about farmer cheese
Speaker 1: and the growing category there. What's the product pipeline look
Speaker 1: like when you want to branch out from Kiefer.
Speaker 3: Yeah, this is really exciting because Farmer's cheese is one
Speaker 3: of the hottest things happening right now.
Speaker 2: It is a kind of a product of the moment.
Speaker 3: As you know, cottage shees really became viral recently. We
Speaker 3: saw this trend and demand for soft on ripened cheese
Speaker 3: is like cottage cheese. This is sort of like a
Speaker 3: blended cottage sheeese already, So it's a recipe hack and because.
Speaker 2: Of like the high demand.
Speaker 3: I mean, you have to be under a rock to
Speaker 3: see the demand for high quality bioavailable protein is off
Speaker 3: the charts, and this offers a tremendous amount of protein people.
Speaker 3: You know, even Bethany Frankel is raving about it and
Speaker 3: sharing it on her Instagram. She paired it with caviar
Speaker 3: on a crisp. Looks great. But you know, there is
Speaker 3: a sort of a buzz around Farmer's Cheese, so much
Speaker 3: so that we've already started shipping into fourteen hundred Albertson
Speaker 3: stores around the country, and we have commitments for another
Speaker 3: two thousand distribution points for farmers cheese and mass market.
Speaker 3: This is the first time we're scaling a legacy product.
Speaker 3: This was product number one and two along with the
Speaker 3: original Keefer that we launched, So this is a product
Speaker 3: we're the number one manufacturers and farmers cheese. So not
Speaker 3: only are we the category leader of Keifer, but we're
Speaker 3: also the category leader of farmers Cheese. We're going to
Speaker 3: see a lot more about this in the coming weeks
Speaker 3: and months out of LifeWay and on your grocery soource shelf.
Speaker 4: Are Americans coming back to dairy because milk, almond milk,
Speaker 4: all of those trends were very popular. But obviously, you
Speaker 4: know this is a dairy product.
Speaker 2: Absolutely yeah.
Speaker 3: Well it's a fermenta dairy, which is not the same
Speaker 3: as just regular milk. Fermenta dairy offers a tremendous amount
Speaker 3: of extra benefits. There are peptides that are released when
Speaker 3: through the fermentation process. Those peptides create a healthy microbiome
Speaker 3: in your gut. They restore all Keifer helps restore all of.
Speaker 2: The good bacteria.
Speaker 3: And consumers are starting to learn about the microbiome and
Speaker 3: the importance of fermented dairy and you know, they are
Speaker 3: getting going to the shelf and they're recognizing that there
Speaker 3: are a lot of options on the shelf. But you know,
Speaker 3: this is not just a fad or a trend. Keifer Again,
Speaker 3: it's been around for two thousand years, it's been this
Speaker 3: the product of intense study for over one hundred years,
Speaker 3: but it's really just now hitting mass market and people
Speaker 3: are starting to make the connection and the tipping point
Speaker 3: that you know, food is medicine or or it's poison.
Speaker 3: You can use food to heal your body, and that's
Speaker 3: what LifeWay keifer does. It heals the body, and that's
Speaker 3: something that's really special and it's authentic. This is a
Speaker 3: recipe that was brought by my family to this country,
Speaker 3: and so it's the it's the original. It's the og
Speaker 3: of Keifer of probiotics. We were the first to talk
Speaker 3: about probiotics. And you know, most of the disease in
Speaker 3: our body, most of our budget in our healthcare is
Speaker 3: from diseases of lifestyle. Keifer can actually help prevent some
Speaker 3: of those diseases of lifestyle. This is an important piece
Speaker 3: of health that all of us should be integrating from
Speaker 3: from cradle to senior.
Speaker 2: Keefer Life Weykeeper is for everyone.
Speaker 3: And you know, it reduces inflammation in the body, which
Speaker 3: is the cause of almost all disease is because of
Speaker 3: inflammation and dysbiosis in the gut. And we're learning that
Speaker 3: and people are starting to understand. And it's available everywhere
Speaker 3: from Walmart to Target, to Amazon to Whole Foods. You know,
Speaker 3: we're in club stores, we're in mass market grocery to
Speaker 3: ultra premium, and so there is something for everyone, and
Speaker 3: our goal is to democratize it to make it accessible
Speaker 3: and available to everyone, not just in America, but we're
Speaker 3: you know, we ship all over and make sure that
Speaker 3: as many people have access to life.
Speaker 2: Weykeeper.
Speaker 1: I'm curious the shares are down about eight point seven
Speaker 1: percent so far this year. They're still shi if by
Speaker 1: five dollars of the acquisition price that Danone offered back
Speaker 1: in November of twenty twenty four, of twenty seven dollars
Speaker 1: per share. What do you think investors are missing with
Speaker 1: this story?
Speaker 3: Well, I would yeah, I mean, I would take a
Speaker 3: look at the five year five year history and the
Speaker 3: trajectory we have brought the company from a dollar fifty
Speaker 3: to you know, whatever it is today, twenty five dollars.
Speaker 3: That's twelve hundred percent growth. Our ebitdah has gone from
Speaker 3: three million dollars to twenty seven dollars, and we are
Speaker 3: on target to continue to forty five dollars plus in.
Speaker 2: Twenty twenty seven.
Speaker 3: We've doubled our We've grown our gross profit one hundred percent.
Speaker 3: We've grown our growth margin by three hundred basis points,
Speaker 3: more than three hundred basis points. I mean, you know,
Speaker 3: we are just starting to hit our stride and we
Speaker 3: have invested in our equipment and capacity. We have great capacity,
Speaker 3: we have you know, the ability to we have a
Speaker 3: strong a strong balance sheet. We have no debt, we
Speaker 3: have cash in the bank, we have a great team,
Speaker 3: we have a you know, incredible demand for our product
Speaker 3: that we manufacture ourselves.
Speaker 2: We have access to capital.
Speaker 1: We the list goes on.
Speaker 2: Ready, the list goes on.
Speaker 1: We only have we only have a minute left. And
Speaker 1: I know, I know Emily has another question. I just
Speaker 1: do want to point out. I'm looking at the five
Speaker 1: year chart. It's up eight hundred and seventy two in
Speaker 1: the last five years. Shares five years ago, we're trading
Speaker 1: at two dollars and twenty seven cents. That was on
Speaker 1: June eleventh, twenty twenty. That was the five year low.
Speaker 1: Up now to twenty two dollars and sixty four cents
Speaker 1: where shares are now.
Speaker 2: Quick questions.
Speaker 3: We're a brand that sets the moment, and I was
Speaker 3: gonna say, we're a brand that meets the moment and
Speaker 3: a brand on the move.
Speaker 2: As you could see.
Speaker 4: Speaking of on the move, everyone's talking about inflation. Do
Speaker 4: you feel like LifeWay Foods is feeling the pressure that
Speaker 4: you'll have to raise prices just to keep up with
Speaker 4: competition and keep up with inflation.
Speaker 3: I mean, that's something that we've navigated and managed for Over.
Speaker 3: You know, thirty nine years, we're about to hit our
Speaker 3: fortieth anniversary. So we've seen these kinds of things in
Speaker 3: the market and it's something that we're used to. We
Speaker 3: still have a lot of price elasticity. Again, we are
Speaker 3: ninety five percent of the key for category, and you know,
Speaker 3: if we need to raise prices, we certainly will. We
Speaker 3: know that when consumers are feeling the pinch in the
Speaker 3: rest of you know, other categories and things household good
Speaker 3: items and other things that are essential, they do tend
Speaker 3: to go back to the grocery store and go.
Speaker 2: Back to the essentials like LifeWay brands.
Speaker 3: They know, brands they trust, and especially brands that have
Speaker 3: a functional element that are offering them some benefits like
Speaker 3: Lifewaykeeper does. So you know, we are battle tested. We've
Speaker 3: been through so many various elements.
Speaker 2: But you know, we've.
Speaker 3: Managed a global pandemic, a global supply chain shortage, and
Speaker 3: a global labor shortage and it really worked our advantage
Speaker 3: and I have no doubt that the same will be
Speaker 3: true as we look to the future.
Speaker 1: Julie, appreciate you taking the time in joining us once again.
Speaker 1: Please do come back, don't be a stranger. Keep us
Speaker 1: up to date on everything happening at the company. Julie
Speaker 1: Smolanski CEO of Lifewave Foods. She is also chairman of
Speaker 1: the board as well as president at the company. She
Speaker 1: joins us from Los Angeles. A reminder, three hundred and
Speaker 1: fifty million dollar market cap maker of Kiefer Farmer cheese
Speaker 1: and more.