Bob Evans Farms Announces Sale Of Bob Evans Restaurants; To Focus On BEF Foods

(RTTNews) - Bob Evans Farms, Inc. (BOBE) announced it has entered into a definitive agreement for the sale of Bob Evans Restaurants to an affiliate of Golden Gate Capital for $565 million plus assumption of certain net working capital liabilities at the time of closing estimated to be $40 to $50 million. The company estimates that cash proceeds net of taxes and transaction-related costs will be $475 to $485 million. Mike Townsley, President, BEF Foods, will assume the role of President and Chief Executive Officer of Bob Evans Farms, Inc. following the closing of the Bob Evans Restaurants transaction.

Bob Evans Farms expects that its board will declare a special dividend of approximately $150 million ($7.50 per share) representing net cash proceeds from the sale of Bob Evans Restaurants after repayment of debt within 60 days following the transaction. Bob Evans Farms anticipates continuation of quarterly dividend payments, currently at $0.34 per share. The board of Bob Evans Farms increased the company's existing share repurchase authorization to $100 million through calendar year 2017.

Bob Evans Farms reaffirmed fiscal 2017 adjusted EPS guidance range of $2.15 to $2.30 assuming April 28, 2017, closings. The company also announced preliminary fiscal 2018 Bob Evans Farms revenue and EBITDA targets of $470 million, and $105 million, respectively, assuming closing of both transactions on April 28, 2017. The company expects to establish a $300 million credit facility at the time of the transaction closings.

Bob Evans Farms also entered into a definitive agreement for the purchase of Pineland Farms Potato Company for $115 million. The purchase price may be increased by up to $25 million if certain financial metrics are achieved during a 24-month period after closing.

President and CEO Saed Mohseni said, "The acquisition of PFPC not only increases our side-dish production capacity, it provides capability to produce and sell diced and shredded potato products in both the retail and foodservice channels. The acquisition also diversifies our production capability by adding a second state-of-the-art potato processing facility with 180 million pounds of capacity, 50 million pounds of which are expected to come online in April 2017. Furthermore, PFPC comes with a 900 acre potato farm and is surrounded by an additional 55,000+ acres of annual potato production. BEF Food's side-dish product mix is expected to reach 66% of sales volume by 2020. Following the completion of these transactions, Bob Evans will be focused exclusively on sales and profit growth of BEF Foods."