Lifeway Foods, Inc. (Nasdaq: LWAY) is facing a takeover bid from France’s Danone S.A. (Paris: BN.PA), which currently owns a 23% stake in the leading U.S. kefir maker. The stock price has surged to $31 after Danone attempted to buy Lifeway for $25 and $27 per share.

CEO Julie Smolyansky, daughter of the late founder, is under pressure from her mother and brother to step down. Her mother and brother, former directors at Lifeway, hold a combined 26% stake and supported the $25-a-share offer.

Danone is threatening to replace Lifeway’s entire board if current takeover talks fail. The move is seen as coercive, and experts warn of legal and practical hurdles in effecting the takeover.

Lifeway recently reported a 10% increase in second-quarter sales, pushing the stock price to $31. The company’s operating performance has been strong, driving the stock higher despite the takeover bid.

Danone and Lifeway are in negotiations over a possible sale, with discussions scheduled until September 15. Danone has issued an ultimatum to approve a board replacement if Lifeway does not sell willingly.

Analyst Ben Klieve believes Lifeway is undervalued, with a fair value higher than Danone’s offer. He has raised his price target to $33 per share, citing the company’s strong financials and market share.

Danone’s threat to replace Lifeway’s board could sway the balance in favor of a takeover. However, governance experts emphasize that the board has a fiduciary duty to all shareholders, regardless of the outcome.

Illinois law requires a 2/3 supermajority shareholder vote for a takeover, posing a challenge for Danone’s bid. The company will need significant shareholder support to succeed in acquiring Lifeway.

Danone’s aggressive tactics may backfire if they are seen as coercive or against shareholder interests. The negotiation process will be closely watched for transparency and fairness.

Overall, Lifeway’s stock performance reflects its strong fundamentals and growth potential, despite the looming threat of a hostile takeover. Shareholders will play a crucial role in determining the company’s future.

Read more at Yahoo Finance: Partner Turned Predator? Danone Puts Governance Under Strain at Lifeway Foods