- Bob Evans is materially undervalued, as its stock price does not reflect the intrinsic value of its underlying assets.
- The Company suffers from a conglomerate discount, as it has two business segments: (1) a family-dining restaurant business, Bob Evans Restaurants, and (2) a packaged foods business, BEF Foods, and trades at a discount to other family-dining restaurant companies and packaged foods companies.
- The Company’s stock price does not reflect the significant real estate value of the Company’s 482 wholly-owned restaurant properties.
- The Company’s stock price has significantly under-performed other publicly-traded family-dining restaurant peers over the last 3-year and 5-year time periods.
- Bob Evans should take a multi-step approach in order to realize this value:
- Step 1: Separate its food products business (BEF Foods) through a sale or a spin-off to its shareholders.
- Step 2: Unlock the substantial real estate value embedded in its many owned restaurant properties through a sale-leaseback transaction.
- Step 3: Implement a large self-tender with most of the proceeds generated from Step 1 and Step 2.
- If Bob Evans were to pursue these steps, Sandell believes the Company could generate approximately $1.08 billion in proceeds and, as a hypothetical example, could use 75% of such proceeds to repurchase its shares at $58 per share while still leaving the Company with substantial cash on the balance sheet.
- 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.
Sandell Asset Management Urges Bob Evans Farms To Take Actions To Unlock Shareholder Value
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