NEW ALBANY, Ohio — Bob Evans Farms, Inc. is now a pure play food company. On Jan. 24, the company announced the sale of its Bob Evans Restaurants business unit to the private equity company Golden Gate Capital for $565 million plus the assumption of certain liabilities. Net proceeds from the sale to Bob Evans Farms are expected to be between $475 million to $485 million.
On the same day, Bob Evans Farms entered into an agreement to acquire the Pineland Farms Potato Co. (PFPC), Mars Hill, Maine, for $115 million. Pineland Farms is a value-added potato processor serving the retail and food service markets. The company also operates a cheese processing business.
|Saed Mohensi, president and CEO, Bob Evans Farms
“We believe this transaction will better enable BEF Foods to continue growing and innovating,” said Saed Mohensi, president and CEO of Bob Evans Farms. “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 food service channels. The acquisition also diversifies our production capability by adding a second potato processing facility with 180 million lbs. of capacity, 50 million lbs. of which are expected to come on-line 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. Its close proximity to tens of thousands of acres of potato production is particularly attractive as it greatly reduces transportation costs. BEF Food’s side-dish product mix is expected to reach 66 percent of sales volume by 2020, and the PFPC acquisition mitigates the need for near-term capital spending for additional capacity to meet our growth targets.”
With the sale to Golden Gate Capital, Mohseni will be leaving Bob Evans Farms to lead Bob Evans Restaurants. Mike Townsley, president of the BEF Foods business unit, will assume the role of president and CEO of Bob Evans Farms.
“Bob Evans Restaurants is an exceptional brand, uniquely differentiated by its deep-rooted heritage of farm-fresh food and heartfelt hospitality,” said Josh Cohen, managing director of Golden Gate Capital. “As an independent company partnered with Golden Gate Capital, Bob Evans Restaurants will be well-positioned to sharpen its focus on enhancing the business, with increased flexibility and resources to grow the company for the long-term. We look forward to working with Saed Mohseni and the talented management team to support Bob Evans Restaurants as it enters this exciting new chapter.”
The sale of Bob Evans Restaurants to Golden Gate Capital brings to a close a long running debate over the best course of business for Bob Evans Farms. In 2013, Sandell Asset Management, an investor in the company, began recommending a spin-off of BEF Foods as a way to improve shareholder returns.
This past October Sandell Asset Management went so far as to seek shareholder action to separate the BEF Foods and Bob Evans Restaurants businesses. In December, Bob Evans Farms announced it was working with J.P. Morgan to review and evaluate strategic opportunities for the business.
“The board of directors has consistently evaluated all options for creating shareholder value,” said Doug Benham, executive chairman of Bob Evans Farms. “From the outset, our philosophy has been to engage in a robust and deliberate process in an effort to make what we believe are the best decisions for shareholders. We believe these transactions are the best options for creating shareholder value and providing for the future success of these two great businesses.”