The Board of DirectorsBob Evans Farms, Inc.Attention: Corporate Secretary8111 Smiths Mill RoadNew Albany, OH 43054
Ladies and Gentlemen:
Based on the previous communications that we have had with the management and the Board of Directors (the “Board”) of Bob Evans Farms, Inc. (“Bob Evans” or the “Company”), you are no doubt aware that Sandell Asset Management Corporation (“Sandell”) is one of the Company’s largest shareholders. While we found our most recent discussion with Steve Davis and Paul DeSantis on October 11 to be quite cordial, we are profoundly concerned by the Board’s lethargic approach to taking action to enhance shareholder value at Bob Evans. In view of your apparent failure to even promptly give serious consideration to the actions we proposed to increase value, let alone actually taking any such actions, we have retained the proxy solicitation firm MacKenzie Partners, Inc. to help us evaluate our options, including a possible consent solicitation, to allow shareholders to seek change at the Company.
We note that significant time has elapsed since our initial July 16 th discussion with Mr. Davis and our August 5 th letter and subsequent conference call with Lead Independent Director Michael Gasser. Furthermore, our September 23 rd letter to the Board addressed many of the key matters that we had previously spoken about with Mr. Gasser. As such, the Board has had over three months to consider the salient points that we had highlighted regarding actions that we believe would deliver significant value to the Company’s shareholders.One can then imagine our extreme disappointment at being told by Steve Davis on October 11 that the Board would review our ideas “in due time.” Three months can easily be characterized as “due time” and the Company’s dilatory stance in no way reflects an understanding of the urgency with which these matters should be treated. Shareholders of Bob Evans can no longer afford to suffer this Board’s apathetic posture as they have in the past. As a particularly glaring example of this apparent apathy, we note that the vast majority of current Board members had presided over the persistent poor results at the Mimi’s Café restaurant chain for almost six years before finally taking action to sell Mimi’s at a $133 million loss in February 2013. The unfortunate example of Mimi’s is just one of a number of troubling cases that we have discovered that make us question the Board’s motivation. Subsequent to our September 24 public filing we have learned from both former shareholders as well as equity analysts that actions similar to those we advocate have been proposed to the Company over many years, all to no avail. Furthermore, we have learned of two separate, multi-billion dollar real estate investment firms that would have a keen interest in pursuing a sale-leaseback transaction with Bob Evans; both firms’ valuation assumptions are consistent with ours, and one firm in particular claims to have tried on many occasions over the last several years to get an audience with Bob Evans but has never received a reply from the Company. These strike us as worrisome examples of a board governed by inertia, or even indifference, rather than its fiduciary responsibilities. To recap, our plan encompasses three broad ideas, namely: (1) the separation of BEF Foods; (2) the sale-leaseback of real estate owned by Bob Evans Restaurants, and (3) the repurchase of shares via self-tender(s).