Bob Evans' Weak Fiscal Year Means an Activist Overhaul, Possible Spinoffs

NEW YORK (TheStreet) -- Shareholders of Bob Evans (BOBE) headed for the exits after a poor full-year earnings report and soft guidance. While the results were mediocre and estimates are coming in well below analysts' targets, investors will want to stick around to see how a battle between Bob Evans and Sandell Asset Management plays out.

Sandell Asset Management began its pressure on Bob Evans back in September 2013. The company, which acquired a 5%-plus stake in Bob Evans, pressured the company to make changes to resurrect the undervalued company. Essentially, Sandell wanted Bob Evans to spin off its retail food product brand and also sell its real estate. The plan was to maximize shareholder value. Sandell put a price target of $73 to $84 on shares if the plan was followed.

The recent fourth quarter provided ample ammo for Sandell in its fight to make changes and control the board of directors at Bob Evans. Same-store sales declined 4.1% in the fourth quarter, with the winter weather to blame. The full year saw a same-store sales decline of 2.1%.

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Despite the weakness at Bob Evans' 561 restaurants in 19 states, its BEF Foods retail division continues to shine. The unit saw pricing and supply issues, but managed to grow revenue 3.4% in the fourth quarter and 6.6% for the full year.

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