Lifeway Foods Inc., Morton Grove, Ill., announced that its Board of Directors has rejected the unsolicited proposal made Sept. 23, by Danone North America PBC to acquire all the shares of Lifeway that it does not already own for $25 a share.

After careful and thorough consideration, conducted in consultation with its independent financial and legal advisors, the Board determined that Danone’s proposal substantially undervalues Lifeway and is not in the best interests of the company and its shareholders or other stakeholders, the company says. In addition, in response to Danone’s proposal and its substantial ownership position in the company, the Board adopted a limited duration shareholder rights plan, effective immediately.

The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Lifeway. The Rights Plan will reduce the likelihood that Danone gains control of Lifeway through open market accumulation or otherwise without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all of the company’s shareholders and other stakeholders, the company says.

The Rights Plan has similar provisions to those of other plans adopted by publicly held companies in comparable circumstances. Under the Rights Plan, Lifeway will distribute to its shareholders one preferred share purchase right for each outstanding share of Lifeway common stock to shareholders of record at the close of business on Nov. 18. Initially, these rights will not be exercisable and will trade with, and be represented by, the shares of Lifeway common stock, the company says.

Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 20% or more of the outstanding shares of Lifeway common stock in a transaction not approved by the Board or if an entity, person or group that currently beneficially owns 20% or more of the outstanding shares of Lifeway common stock acquires any additional shares. If the rights become exercisable, each right will entitle its holder (other than the person, entity or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right. Certain synthetic interests in securities created by derivative positions are considered to be ownership of the underlying shares of common stock for purposes of the Rights Plan.

The Rights Plan does not deter any offer to acquire the company from any party, nor does it preclude Lifeway’s Board from considering an offer that is fair and otherwise in the best interests of the company’s shareholders.

Unless earlier redeemed, terminated or exchanged pursuant to the Rights Plan, the rights will expire on Nov. 4, 2025.

Lifeway remains focused on its strategic plan to bring kefir to more households while also expanding into adjacent categories. The company plans to continue to build on its strong momentum, as evidenced by recent financial results, and creating shareholder value. The Board and management are committed to acting in the best interests of all shareholders and ensuring that they are able to realize the full potential value of their investment.

Further details about the Rights Plan will be contained in a Current Report on Form 8-K to be filed by the company with the Securities and Exchange Commission.

Evercore is serving as a financial adviser to Lifeway and Sidley Austin LLP is serving as legal counsel to Lifeway.