Lifeway absorbs organic kefir competitor

Lifeway Foods (Illinois/USA) is acquiring Helios Nutrition, its competitor in the kefir market, for $ 3.8 million in cash and stock.

The company will pay $ 2.5 million in cash and issue $ 1.3 million of stock, or about 101,000 Lifeway treasury shares. In addition, Lifeway will assume a $ 4.2 million debt note to be paid off quarterly over four years. Lifeway retains about 190,000 treasury shares, accumulated through buybacks.

Lifeway wants to increase its organic presence and reinforce its position at the top of the sector. The company already claims to be the number maker of kefirs, cultured dairy drinks that deliver probiotic health benefits, with Helios occupying the second spot with 2004 revenues approximately a quarter of Lifeway’s. But Helios was said to be number one in organic kefirs. Although Lifeway already had an organic range of its own, it is now ensured a steady stream of organic milk to work with since the Helios package includes an organic dairy subsidiary. In the past, Lifeway’s bottom line has been impacted by high milk costs. (Picture/Lifeway)

The takeover, funded through a combination of cash, debt note and treasury shares, has other benefits for the two companies, too. It will deliver savings through production synergies, marketing and purchasing. The two companies have their strongholds  of loyal retailers. While Minnesota was loyal to Helios, which hails from that state, Chicago consumers’ allegiance was with Lifeway. In the wider world, it is hoped that the unification of the two companies will permit them to create even more of a buzz about kefirs in the healthy beverage and dairy sectors.      

Economy and other managers will stay on in a consultancy capacity, and Lifeway is assuring that all other Helios employees will be retained. However there is to be an extended period of transition Helios’ Minnesota headquarters to Illinois, in order to maximize efficiency and lower overall per-unit cost.