Shares of Lifeway Foods (NASDAQ: LWAY) had soared 44% through 10:35 a.m. ET Tuesday morning on some explosive news from the boardroom.
In a press release this morning, former company chairperson Ludmila Smolyansky and former COO Edward Smolyansky (her son) announced they have filed a "consent statement" with the Securities and Exchange Commission (SEC). The statement describes something the mother-and-son team is calling a "Life Back to Lifeway" campaign. And its aim seems to be to oust their daughter/sister, Julie Smolyansky, from her position as CEO.
The company notes on its website that the "Lifeway story begins in 1986, Michael and Ludmila Smolyansky immigrated to America from the former Soviet Union and began making Kefir in the basement of their Skokie, IL home."
What exactly is going on at Lifeway?
According to the press release, mother and son aim to replace Lifeway's entire board of directors, and the CEO, in order to repair "repeated failures of corporate governance" and improve shareholder returns. The pair say the company has been on "autopilot" and it's "time for a fresh approach to leadership that prioritizes growth and innovation over personal agendas."
The PR is short on specifics, however, and doesn't state what exact changes the pair would make to fix the company. Such details might be included in the "consent statement," but that statement is not recorded on the SEC's website at this time.
Is Lifeway stock a sell?
So basically what we are looking at here is an attempted boardroom coup -- and investors seem to like the idea. The question is, why it is happening now?
On one hand, sure, Lifeway's stock has been pretty flat for the past year, bouncing around the $10-to-$11-a-share price for months. On the other, though, Lifeway just reported its Q2 earnings results this morning, and the news was quite good: Sales were up 25% year over year, and per-share earnings up 19%.
Year to date, the numbers look even better, with debt-free Lifeway stock growing sales 22% in the first half of the year, and profits up 58%. Those are hardly rookie numbers, and don't really give the impression of a company operating on "autopilot."
In fact, Lifeway stock kind of looks like a buy.
Editor's note: This article has been corrected.
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