Sandell Seeks Shareholder Support for Bob Evans Breakup

Bob Evans Farms Inc. shareholder Sandell Asset Management Corp. publicly called for a shareholder vote, adding pressure to split the company's restaurant and food-distribution businesses.

"We have profound concerns regarding the continued disconnect between the company's stock price and the value associated with its two independently operated business segments," Sandell Chief Executive Thomas Sandell wrote in a letter to the Bob Evans board. The disconnect has "forced us to take this public step of embarking on the path of seeking shareholder action by written consent."

In response, the company pointed to its most-recent earnings call where Chief Executive Saed Mohseni said, "Our board of directors continues to evaluate all options for creating shareholder value."

Mr. Sandell won a third of the company's 12 board seats in an August 2014 proxy fight. The revamped board subsequently shot down one of Mr. Sandell's main ideas for Bob Evans: a separation of the packaged-foods unit from its restaurant-chain business.

Sandell Asset Management, which owns about 6.4% of Bob Evans' shares according to FactSet, has been waging a campaign against the board that Mr. Sandell helped to select, including by sending multiple letters, meeting with executives and asking probing questions on earnings calls.

Bob Evans, which previously hired investment bank Lazard Ltd. to review options, concluded in March 2015 that the packaged-foods business was too small to be a stand-alone company and that the move could result in hefty taxes. The Internal Revenue Service is considering changing rules for spinoffs, which means they wouldn't necessarily be tax-free.

Sandell wants shareholders to support a motion asking Bob Evans to publicly commit to a separation process and name the investment bank advising it.

The company's restaurant business accounts for 70% of revenue, with 522 restaurants in 18 states. Its food business distributes sausages and refrigerated side dishes, such as macaroni and cheese and mashed potatoes, nationally.

Shares, which have fallen 13% in the last 12 months, were inactive in premarket trading.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

October 06, 2016 09:45 ET (13:45 GMT)

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