Bob Evans Farms, which operates a 523-unit chain of family dining eateries in the nation's heartland, said Tuesday that it is splitting up its two major businesses.
The Bob Evans Restaurants division will be taken private in a sale to a private equity firm. The parent company, however, will remain public as it expands its BEF Foods division, which has a big stake in refrigerated side dishes sold in supermarkets, especially mashed potatoes, and sausages.
"The steps we took today are the transformation of Bob Evans," said CEO Saed Mohseni in an interview. The two businesses "were founded together, but now that they both have scale...it's time to separate them."
Mohseni said he plans to continue to head Bob Evans Restaurants, which were sold to an affiliate of Golden Gate Capital for $565 million and assumption of up to $50 million in liabilities.
As part of the deal, proceeds will be used to pay down debt and for a special dividend amounting to $150 million, or about $7.50 a share, after the sale closes.
At the same time, BEF Foods will continue to operate under the Bob Evans Farms banner and is acquiring Pineland Farms Potato, which not only adds another potato processing facility to BEF, but also comes with a 900-acre potato farm. Mohseni says BEF has about half of the total market share for refrigerated mash potatoes in supermarkets.
BEF Foods is the not only the fastest growing part of Bob Evans, but the most profitable, Mohseni says. BEF will be headed by its current president, Mike Townsley. But even though sit-down restaurants have come under pressure from updscale fast-food providers, Mohseni said he wanted to stay with the restaurant side of the business because of its potential.
"There's a lot more opportunity," he says, especially with the popularity of the breakfast segment, which is seeing a revival from Boomers.
He said, however, that it is a 60-year-old "mature" business that will benefit from being private, allowing it to be preserved over the long run.
The split was announced after the market close. Bob Evans Farms shares closed at $47.95, down 19 cents or 0.39%. They have ranged form a low of $35.63 to a high of $55.12 over the past 52 weeks.
