Food Business News - December 17, 2013 - (Page 18)

Bob Evans Farm on the brink? Shareholder initiates battle for control, questions the ability of board to increase company's value NEW YORK - Sandell Asset Management, one of Bob Evans Farm's larger shareholders with a 6.5% stake in the company, issued an open letter Dec. 9 stating the shareholder has serious doubts about Bob Evans management's ability to realize the inherent value of the company. As a result, Sandell plans to commence a "consent solicitation" effort with other Bob Evans Farm shareholders in an effort to force change at the company. "We have made repeated attempts to engage in a dialogue with the company over a period of nearly five months for the sole purpose of discussing ideas which could deliver significant additional value to you, the true the ingredient & blending solution. one stop shopping national distribution B.C. Williams Bakery Service BCW Food Products 800.527.4104 a baking tradition since 1935. 18 FOODBUSINESS NEWS ® owners of Bob Evans," Sandell said in the letter. "Unfortunately, management and the board of directors, aided by its financial advisers Lazard, have decided to take no action with respect to our ideas aimed at unlocking what we believe may exceed $80 per share of value associated with the company's unique assets, apparently choosing instead to pursue 'business as usual,' despite the company's abysmal earnings performance and concomitant stock price decline." In Nasdaq trading Dec. 10, Bob Evans shares closed at $51.31. The $80 price would represent a 56% premium above the recent market price. Responding to Sandell's latest initiative, Bob Evans Farm said the company's board, with assistance from its independent financial advisers, Lazard, vetted the suggestions it has received from Sandell and unanimously concluded the recommended steps are not in the best interest of the company's shareholders. The discussions between Sandell Asset Management and Bob Evans Farm became public in late September when Thomas E. Sandell, chief executive officer of the investment company, sent a letter to Bob Evans' board outlining three strategies the shareholder believed would increase Bob Evans' value. The strategies included spinning off the food business; unlocking the real estate value embedded in Bob Evans' many owned restaurant properties through a sale-leaseback transaction; or implementing a large self-tender with most of the proceeds generated from the first two recommended strategies. If Bob Evans were to pursue the recommendations, Mr. Sandell said he believed the company could generate approximately $1.08 billion in proceeds and, as a hypothetical example, could use 75% of the proceeds to repurchase its shares at $58 per share while still leaving the company with substantial cash on the balance sheet. Mr. Sandell further noted a potential post-tender stock price of between approximately $73 per share and $84 per share, or an average price of $78.50 per share, could be justified. On Dec. 4, while discussing Bob Evans' fiscal 2014 second-quarter results, Steve Davis, chairman and c.e.o., outlined why the company rejected Sandell's recommendations. "With respect to a sale and lease back of a significant portion of our restaurants, we take the position that the sale and lease back of our real estate is essentially a financing strategy and would be one of the most expensive forms of financing we could take on relative to other forms of December 17, 2013

Table of Contents for the Digital Edition of Food Business News - December 17, 2013

Food Business News - December 17, 2013
Post acquisition binge continues
WhiteWave Foods to acquire Earthbound Farm
New U.S.D.A. action plan targets Salmonella
Table of Contents
Web Contents
Editorial - Potential exists for a great 2014
Sysco to acquire US Foods in $8.2 billion deal
Pepsi ousts Coca-Cola at Buffalo Wild Wings
Kroger sees greater opportunity in ‘natural’ portfolio
Diamond Foods continues to struggle
C.D.C. taking food safety surveillance to food service
Use of antibiotics in meat animal production may be ending
Pizza: The next big thing in fast-casual?
On-line sales looming for food
Bob Evans Farm on the brink?
Post acquisition binge continues
Breaking in to breakfast
Global trends to watch in 2014
Yogurt makers pump up protein claims
Market Insight - Corn sweetener prices will be lower in 2014
Ingredient Innovations - Mimicking mother’s milk
Sodium reduction: A little goes a long way
Beverage Business News - Wellness beverages
New Food Products
Ingredient Market Trends - Nature’s bounty, nature’s wrath
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - December 17, 2013