Did Danone Skim Over the Details at Lifeway? Dairy Giant May Not Have Vetted Directors with Care

Lifeway Foods, Inc. (Nasdaq: LWAY) facing takeover advance from France’s Danone S.A. (Paris: BN.PA), which owns 23% of leading U.S. kefir maker as strategic partner
Edward Smolyansky, brother of CEO Julie Smolyansky, has launched campaign to replace entire board and encourages deal
Danone says if talks fail, it “intends to consent with respect to all of the shares of Common Stock it owns in favor of Edward Smolyansky’s proposals…to replace the entire Lifeway Board of Directors.”
Analysis by CorpGov finds Mr. Smolyansky’s board nominees may have misstated credentials in SEC filings, faced trouble with financial regulators
Nominee Cindy Curry was described in proxy, filed with SEC, to be CFO of multiple companies including Broadwind, Inc. (Nasdaq: BWIN) where someone else is documented as having the role during the time
Curry clarified in a statement to CorpGov she was CFO of a division, not Broadwind the listed company
Nominee Michael Leydervuder has no experience as a public company director, has faced “involuntary dissolution” of seven known companies in Illinois
Nominee Richard Beleutz has faced multiple FINRA sanctions and now works with fellow nominee Robert Whalen

France’s Danone S.A. (Paris: BN.PA) has won the trust of consumers while carefully selling perishable milk products around the world. But in the case of its takeover attempt at Lifeway Foods, Inc. (Nasdaq: LWAY), it has rushed to support a board of directors that could potentially spoil.

After rebuffing offers at $25 and $27 a share, leading kefir-maker Lifeway is in a fresh negotiation period with Danone that’s due to run another couple of weeks. As CorpGov wrote recently, it appears the talks aren’t moving because Danone has issued an ultimatum – raising questions about whether proper corporate governance will prevail or minority shareholders face risk. In an SEC filing, Danone said that if Lifeway won’t sell willingly, it will vote in favor of an agitator’s proposal to “replace the entire Lifeway Board of Directors.”

That agitator is Edward Smolyansky, former COO and son of the company’s founder, who backed a $25-a-share offer last year (the shares have since rallied to $30 while operating performance improved). Trouble is, Mr. Smolyansky served Danone up a slate of directors who may be more complicated than they appear in bios submitted to the SEC.

One nominee to consider is Cindy Curry, who has no doubt had an impressive career in the advertising world. But dig a little deeper, and her credentials reported in an SEC filing don’t quite align with reality.

In a definitive proxy, Ms. Curry’s experience is listed as Executive Vice President, Chief Financial Officer of BBDO Worldwide (NYSE: OMC), a global advertising agency, and as Chief Financial Officer of IPG Mediabrands (NYSE: IPG), a media and marketing firm, and as Chief Financial Officer of Broadwind Energy (NYSE: BWEN), a provider of wind energy equipment.

But another executive, Stephanie Kushner, is listed in SEC filings as CFO during Ms. Curry’s tenure at the company, now called Broadwind, Inc. After being contacted by CorpGov, Ms. Curry acknowledged she was not in fact CFO the listed company.

“Fifteen years ago, I was the CFO of the manufacturing divisions of Broadwind Energy (over 80% of the company’s annual revenue),” Ms. Curry told CorpGov in a statement. “Stephanie Kushner was the CFO of the holding/parent company.”

In both of the other positions mentioned, there are records of other executives in the CFO roles of BBDO Worldwide and IPG Mediabrands during the times Ms. Curry was employed there. Ms. Curry confirmed to CorpGov that her roles at both of those companies were also CFO positions within divisions, rather than the parent companies cited in the SEC proxy. Neither BBDO Worldwide or IPG Mediabrands returned emails from CorpGov.

A spokesperson for Lifeway declined to comment while neither Danone nor a public-relations firm representing Edward and Ludmila Smolyanksy replied to requests for comment.

It appears another nominee, George Sent, may not always have been a cheerleader for Edward Smolyansky and yet found his way onto the director slate. Mr. Sent was Chairperson, Audit and Corporate Governance Committee, in 2019. During his time in that role, Edward Smolyansky’s role was reduced to no longer include his longtime positions as treasurer and secretary, though he kept the Chief Operating Officer title.

In an interesting twist, Mr. Sent has advised on sale of another consumer company, Follow Your Heart, to Danone. That suggests he’s familiar with the path Danone and the agitating Smolyansky family are keen to take. Mr. Sent didn’t respond to a request for comment.

Another pair of nominees are so similar it’s hard to see why both are needed on the board. Richard Beleutz has faced multiple FINRA troubles and is a longtime colleague of another nominee, Robert Whalen. Mr. Beleutz is now Founder and Chief Executive Officer of AIR Asset Management, where Mr. Whalen also works. Both men worked in senior roles at a firm called Brewer Financial Services, which was expelled from FINRA in 2011 (neither were accused of wrongdoing in that matter). Mr. Beleutz didn’t respond to a request for comment while Mr. Whalen couldn’t be reached.

Other nominees don’t seem to bring the right skill set to the Lifeway board, which should focus on maximizing shareholder value. Michael Leydervuder, who works in real estate, has no experience as a public company director and has faced “involuntary dissolution” of seven known companies in Illinois, according to the Secretary of State’s website. Mr. Leydervuder could not be reached for comment.

As for Edward and Ludmila Smolyansky, they’ve started a potential rival to Lifeway, Lucy’s Organics, where he is President according to his LinkedIn bio, yet nominated themselves to return to Lifeway board.

The big concern among minority shareholders is that the challenger board will swiftly sell the company to Danone and leave serious money on the table. But even a straightforward analysis of publicly-available information shows cracks in the slate, making Danone’s endorsement a potential embarrassment for the company, widely regarded as a crown jewel of the French business world.

“With dissident directors, you have to be very careful in the selection process. If Danone is supporting a slate, it’s very important to create a slate that’s a gold standard,” Charles Elson, Founding Director, Weinberg Center for Corporate Governance at the University of Delaware told CorpGov. “That’s why you vet your candidates. You’ll be judged based on who they are.”

CorpGov

John Jannarone

Editor-in-Chief

Editor@CorpGov.com

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