|Sandell tells Bob Evans to mull unit sale, spinoff||| Print ||
|Written by Associated Press|
|Tuesday, 24 September 2013 10:38|
NEW YORK (AP) — Bob Evans Farms' biggest stockholder is proposing that the restaurant owner consider selling or spinning off its food products business in order to help create more value for shareholders.
Its stock climbed on Tuesday, briefly hitting an all-time high.
Bob Evans Farms Inc. owns the Bob Evans restaurant chain, which it has invested heavily in revamping to draw more customers. It agreed in January to sell its Mimi's Cafe chain for $50 million to LeDuff America Inc. It also sells some food products under the Bob Evans and Owens brand names. The Columbus, Ohio, company recently bolstered that business with the acquisition of Kettle Creations, which makes mashed potatoes, macaroni and cheese and other side dishes.
Last month Bob Evans Farms reported its fiscal first-quarter profit fell almost 40 percent due to large one-time costs. Like many of its peers, the company has struggled with a period of sluggish sales as consumers have become more selective about spending and eating out.
Sandell Asset Management Corp., which owns about 5 percent of Bob Evans stock, said Tuesday that it sent a letter to Bob Evans Farms suggesting that the company either sell or spin off its food products business and arrange some sale leasebacks of its restaurant properties. It recommended that the company conduct a self-tender for its shares with most of the proceeds from the suggested moves.
Sandell says that the restaurant owner is undervalued and that its stock price doesn't account for what it feels is the significant real estate value of its 482 company-owned restaurants.
Shares of Bob Evans Farms gained $2.73, or 4.8 percent, to $59.75 in morning trading. The stock hit an all-time high of $60.22 earlier in the session.
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