Bob Evans Farms (BOBE) to be acquired by Post Holdings (POST) for $77.00/share

   

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Post Holdings (POST) to acquire Bob Evans Farms for $77.00/share, a $1.5 bln deal at a 15% premium; Post also reaffirms FY17 EBITDA

Post (POST) will acquire Bob Evans for $77.00 per share. The highly complementary combination will significantly strengthen Post's portfolio of brands, expand choices for customers and increase Post's presence in higher growth categories of the packaged food market. The equity value of the transaction is ~$1.5 billion (15% premium).

Post expects to combine its existing refrigerated retail egg, potato and cheese business with Bob Evans, establishing a refrigerated retail business within Post, which will be led by Mike Townsley, Bob Evans' current President and CEO. Jim Dwyer will continue in his current role as President and CEO of the Michael Foods Group, managing the commercial foodservice egg, potato and pasta businesses, which will include the Bob Evans foodservice business.

Immediately accretive to Post's top-line growth, Adjusted EBITDA margins and free cash flow: Post management expects Bob Evans to contribute ~$107 million of adjusted EBITDA on an annual basis, which is the midpoint of Bob Evans' current fiscal year 2018 adjusted EBITDA outlook. This outlook is before the realization of cost synergies which Post management expects to be ~$25 million annually by the third full fiscal year post-closing, resulting from benefits of scale, shared administrative services and infrastructure optimization.

Post management has affirmed its fiscal 2017 Adjusted EBITDA guidance range of $975-990 million

Bob Evans (BOBE) to sell Bob Evans Restaurants, will acquire Pineland Farms Potato Company

• Bob Evans Farms, Inc. is leaving the restaurant business and transitioning fully into pre-packaged and frozen foods.
• Golden Gate Capital to acquire Bob Evans Restaurants for $565 million plus assumption of certain net working capital liabilities. Net proceeds of $475 to $485 million expected
• Golden Gate Capital owns California Pizza Kitchen and Red Lobster.
• The company announced two transformational transactions resulting from the board of directors' strategic review of the Company's alternatives for creating shareholder value. The sale of Bob Evans Restaurants and the acquisition of Pineland Farms Potato Company marks the beginning of a new era at Bob Evans Farms in which the Company will focus exclusively on realizing the full potential of its BEF Foods business. BEF Foods is the national market share leader in refrigerated dinner side dishes, and is also the market share leader in sausage products in its core Midwest markets. 

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Bob Evans Farms, Inc. announces definitive agreements for the sale of Bob Evans Restaurants and the purchase of Pineland Farms Potato Company, enabling the Company to focus on driving growth of BEF Foods

Net proceeds of Bob Evans Restaurants transaction expected to be used for repayment of outstanding indebtedness and payment of a special dividend of approximately $150 million ($7.50 per share) within approximately 60 days following closing

BEF Foods acquiring Pineland Farms Potato Company for $115 million using new borrowings. Purchase price may be increased if certain financial metrics are achieved during a 24-month period after closing

Both transactions expected to close by the end of fiscal 2017 (April 28, 2017)

Bob Evans (BOBE) reported earnings Mon 5 Dec 2016 (a/h)

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Bob Evans beats by $0.11, reports revs in-line; raises FY17 EPS above consensus, lowers BEF segment sales due to pricing, reaffirms restaurant comps:

• Reports Q2 (Oct) earnings of $0.56 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of $0.45; revenues fell 2.8% year/year to $316 mln vs the $318.17 mln Capital IQ Consensus. 
• Same-store sales declined 1.8% (-2% in Aug/Sept, -1.4% in Oct.) with the balance of the net sales decline due to net restaurant closures during the past year; a new menu design, product upgrades, and improved hospitality continue to enhance the guest experience
• BEF Foods' net sales were $96.2 mln, an increase of $1.9 mln, or 2.0%, compared to $94.3 mln in the corresponding period last year. Pounds sold increased 6.9 percent while average net selling price per pound declined 4.6 percent compared to the corresponding period last year. BEF Foods non-GAAP operating income was $18.7 mln, compared to $17.6 mln in the corresponding period last year
• Co issues guidance for FY17, raises EPS to $2.15-2.30 from $2.05-2.20, excluding non-recurring items, vs. $2.11 Capital IQ Consensus; lowers FY17 revs to $1.24-1.29 bln from 1.28-1.33 bln vs. $1.3 bln Capital IQ Consensus. 
• "While we continue to expect full-year negative low-single digit to flat same-store sales at Bob Evans Restaurants, we have adjusted our restaurant commodity pricing outlook to negative low-single digit to flat for the year, from approximately flat previously. As for BEF Foods, we have lowered our sow cost forecast to $42 to $45 per hundredweight, from $50 to $53 previously, to reflect expectations for the remainder of the fiscal year. As a consequence of lower projected sow costs, we expect lower sausage pricing (resulting from increases in trade spending to reflect an increased competitive pricing environment from lower sow costs) and have lowered our BEF Foods sales outlook to $390 to $410 mln, from $400 to $420 mln previously."