Post Holdings, Inc. (NYSE:POST) (“Post”) and Bob Evans Farms, Inc.
(NASDAQ:BOBE) (“Bob Evans”) today announced that they have entered
into a definitive agreement in which Post will acquire Bob Evans
for $77.00 per share. The highly complementary combination will
significantly strengthen Post’s portfolio of brands, expand choices
for customers and increase Post’s presence in higher growth
categories of the packaged food market.
Founded in 1948, Bob Evans is a leading producer and distributor
of refrigerated potato, pasta and vegetable-based side dishes, pork
sausage, and a variety of refrigerated and frozen convenience food
items under the Bob Evans, Owens, Country Creek and Pineland Farms
brands. Bob Evans also has a growing foodservice business,
representing approximately 35% of volume. The foodservice business
sells a range of products, including sausage, sausage gravy,
breakfast sandwiches and side dishes, which are made to match
individual customer specifications.
The addition of Bob Evans’ highly complementary portfolio of
brands and products will meaningfully enhance Post’s refrigerated
side dish offering, provide Post with a presence in breakfast
sausage and will immediately provide Post with a leading position
in the higher growth perimeter of the store. The combination with
Bob Evans will also strengthen Post’s presence in commercial
foodservice, create opportunities for future growth and enhance
Post’s position as one of North America’s largest packaged food
companies.
“We have enormous respect for Bob Evans’ success and are excited
about the growth opportunities this combination will create,” said
Rob Vitale, President and Chief Executive Officer of Post Holdings.
“Combining with Bob Evans expands our portfolio of top brands and
gives Post a leading position in the perimeter of the store. We
look forward to welcoming the talented Bob Evans team to Post and
working to create a successful future together.”
“We are pleased to join the Post family, combining our
complementary portfolios to the benefit of all of our
stakeholders,” said Mike Townsley, President and Chief Executive
Officer of Bob Evans Farms. “This transaction creates enhanced and
certain value for our stockholders, while providing further
resources and reach to deliver the Bob Evans experience to a
broader audience of consumers and retailers. We are very proud of
our 70 year history as a beloved brand and eager to begin this next
chapter of growth.”
The transaction, which was approved by the Boards of Directors
of both companies, is expected to be completed in the first
calendar quarter of 2018, Post’s second quarter of fiscal year
2018, subject to customary closing conditions including the
expiration of waiting periods under U.S. antitrust laws and
approval of Bob Evans’ stockholders.
Organizational Structure
Upon closing of the acquisition, Post expects to combine its
existing refrigerated retail egg, potato and cheese business with
Bob Evans, establishing a refrigerated retail business within Post,
which will be led by Mike Townsley, Bob Evans’ current President
and CEO. Jim Dwyer will continue in his current role as President
and CEO of the Michael Foods Group, managing the commercial
foodservice egg, potato and pasta businesses, which will include
the Bob Evans foodservice business.
Financial Details
The equity value of the transaction is approximately $1.5
billion. The acquisition purchase price represents a 15% premium on
the 30 day volume weighted average price (VWAP) of Bob Evans
shares. Post expects to finance the purchase with cash on hand and
through borrowings under Post’s existing revolving credit facility.
Bob Evans will continue its dividend payments in the ordinary
course of business pending closing.
Post management expects Bob Evans to contribute approximately
$107 million of adjusted EBITDA on an annual basis, which is the
midpoint of Bob Evans’ current fiscal year 2018 adjusted EBITDA
outlook. This outlook is before the realization of cost synergies
which Post management expects to be approximately $25 million
annually by the third full fiscal year post-closing, resulting from
benefits of scale, shared administrative services and
infrastructure optimization. One-time costs to achieve synergies
are estimated to be approximately $25 million. The transaction is
expected to be immediately accretive to Post’s top-line growth,
Adjusted EBITDA margins and free cash flow, excluding one-time
transaction expenses. For additional information regarding non-GAAP
measures, such as Adjusted EBITDA, see the related explanations
presented under “Use of Non-GAAP Measures” later in this
release.
Outlook
Post management has affirmed its fiscal 2017 Adjusted EBITDA
guidance range of $975-$990 million (inclusive of Weetabix’s
contribution for the fourth quarter).
Post provides Adjusted EBITDA guidance and discloses its
expectations as to the effect of the Bob Evans transaction on
Post’s Adjusted EBITDA, including the expected annual contribution
of Bob Evans, and free cash flow only on a non-GAAP basis and does
not provide a reconciliation of its forward-looking non-GAAP
guidance measures to the mostly directly comparable GAAP measures
due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that could be made for non-cash
mark-to-market adjustments and cash settlements on interest rate
and cross-currency swaps, provision for legal settlement, net
foreign currency gains for purchase price of acquisition,
transaction and integration costs, restructuring and plant closure
costs, assets held for sale, mark-to-market adjustments on
commodity hedges and other charges reflected in Post’s
reconciliation of historical numbers, the amounts of which, based
on historical experience, could be significant. For additional
information regarding Post’s non-GAAP measures, see the related
explanations presented under “Use of Non-GAAP Measures” later in
this release.
Additional Information
UBS Investment Bank, Barclays, Goldman Sachs and Bank of
America Merrill Lynch are acting as financial advisors to Post.
J.P. Morgan Securities LLC acted as exclusive financial advisor to
Bob Evans and provided a fairness opinion to its Board of
Directors.
Conference Call
Post will host a conference call on Tuesday, September 19, 2017
at 8:00 a.m. EDT in which Robert V. Vitale, Post’s President and
Chief Executive Officer, and Jeff A. Zadoks, Post’s Senior Vice
President and Chief Financial Officer, will discuss the acquisition
and respond to questions.
Interested parties may join the conference call by dialing (877)
540-0891 in the United States and (678) 408-4007 from outside of
the United States. The conference identification number is
87596030. Interested parties are invited to listen to the webcast
of the conference call, which can be accessed by visiting the
Investor Relations section of Post’s website at
www.postholdings.com and Bob Evans’ website at
investors.bobevans.com.
A replay of the conference call will be available through
Tuesday, September 26, 2017 by dialing (800) 585-8367 in the United
States and (404) 537-3406 from outside of the United States and
using the conference identification number 87596030. A webcast
replay will also be available for a limited period in the Investor
Relations section on Post’s and Bob Evans’ websites.
Use of Non-GAAP Measures
Post uses Adjusted EBITDA and free cash flow, both of which are
non-GAAP measures, in this release to supplement the financial
measures prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Adjusted EBITDA is not prepared in
accordance with U.S. GAAP, as it excludes certain items, and may
not be comparable to similarly-titled measures of other
companies.
Post management uses certain non-GAAP measures, including
Adjusted EBITDA and free cash flow, as key metrics in the
evaluation of underlying Company and segment performance, in making
financial, operating and planning decisions, and, in part, in the
determination of cash bonuses for its executive officers and
employees. Post management believes the use of non-GAAP measures,
including Adjusted EBITDA and free cash flow, provides increased
transparency and assists investors in understanding the underlying
operating performance of Post and its segments and in the analysis
of ongoing operating trends.
Because Post discusses Adjusted EBITDA and/or free cash flow in
this release only in relation to Post’s fiscal 2017 Adjusted EBITDA
guidance and management’s expectations of the future effect of the
Bob Evans transaction on these non-GAAP measures, Post has not, for
the reasons discussed above, provided a reconciliation of its
forward-looking Adjusted EBITDA and free cash flow expectations to
the mostly directly comparable GAAP measures.
Prospective Financial Information
Prospective financial information is necessarily speculative in
nature, and it can be expected that some or all of the assumptions
underlying the prospective financial information described above
will not materialize or will vary significantly from actual
results. For further discussion of some of the factors that may
cause actual results to vary materially from the information
provided above see “Forward-Looking Statements” below. Accordingly,
the prospective financial information provided above is only an
estimate of what Post management believes is realizable as of the
date of this press release. It should also be recognized that the
reliability of any forecasted financial data diminishes the farther
in the future that the data is forecast. In light of the foregoing,
the information should be viewed in context and undue reliance
should not be placed upon it.
Cautionary Statement Regarding Forward Looking
Statements
Certain matters discussed in this press release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are made based on known events and circumstances at the
time of release, and as such, are subject to uncertainty and
changes in circumstances. These forward-looking statements include,
among others, statements regarding Post’s fiscal 2017 Adjusted
EBITDA guidance range, expected synergies and benefits of the
acquisition of Bob Evans, expected sources of financing,
expectations about future business plans, prospective performance
and opportunities, stockholder and regulatory approvals and the
expected timing of completion of the transaction. These statements
may be identified from the use of forward-looking terminology such
as “anticipates,” “believes,” “may,” “should,” “could,”
“potential,” “continues,” “plans,” “forecasts,” “estimates,”
“projects,” “predicts,” “would,” “intends,” “anticipates,”
“expects,” “targets,” “is likely,” “will,” or the negative of these
terms and similar expressions, and include all statements regarding
future performance, earnings projections, events or developments.
There is no assurance that the acquisition of Bob Evans by Post
will be consummated and there are a number of risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements made herein. These risks and
uncertainties include, but are not limited to, the following:
- the occurrence of any event, change or other circumstances that
could delay the closing of the proposed transaction;
- the possibility of non-consummation of the proposed transaction
and termination of the merger agreement;
- the ability and timing to obtain the approval of Bob Evans’
stockholders and required regulatory approvals and to satisfy other
closing conditions to the merger agreement;
- the risk that stockholder litigation in connection with the
proposed transaction may affect the timing or occurrence of the
proposed transaction or result in significant costs of defense,
indemnification and liability;
- adverse effects on Post’s common stock or Bob Evans’ common
stock because of the failure to complete the proposed
transaction;
- Post’s or Bob Evans’ respective businesses experiencing
disruptions from ongoing business operations due to
transaction-related uncertainty or other factors making it more
difficult than expected to maintain relationships with employees,
business partners or governmental entities, both before and
following consummation of the transaction;
- Post and Bob Evans being unable to promptly and effectively
implement integration strategies and obtain expected cost savings
and synergies within the expected timeframe;
- Post’s ability to retain certain key employees at Bob
Evans;
- significant transaction costs which have been and may continue
to be incurred related to the proposed transaction;
- Post’s high leverage, Post’s ability to obtain additional
financing (including both secured and unsecured debt), and Post’s
ability to service its outstanding debt (including covenants that
restrict the operation of its business);
- Post’s ability to promptly and effectively integrate the
Weetabix business and obtain expected cost savings and synergies
within the expected timeframe;
- Post’s ability to continue to compete in its product markets
and its ability to retain its market position;
- Post’s ability to anticipate and respond to changes in consumer
preferences and trends and introduce new products;
- Post’s ability to identify, complete and integrate acquisitions
and manage its growth;
- changes in Post’s or Bob Evans’ management, financing and
business operations;
- significant volatility in the costs of certain raw materials,
commodities, packaging or energy used to manufacture Post’s or Bob
Evans’ products;
- impairment in the carrying value of goodwill or other
intangibles;
- Post’s or Bob Evans’ ability to successfully implement business
strategies to reduce costs;
- Post’s or Bob Evans’ ability to comply with increased
regulatory scrutiny related to certain of their respective products
and/or international sales;
- allegations that Post’s or Bob Evans’ products cause injury or
illness, product recalls and product liability claims and other
litigation;
- legal and regulatory factors, including advertising and
labeling laws, changes in food safety and laws and regulations
governing animal feeding and housing operations;
- the ultimate impact litigation may have on Post or Bob
Evans;
- the loss or bankruptcy of a significant customer;
- consolidations in the retail grocery and foodservice
industries;
- the ability of Post’s private label products to compete with
nationally branded products;
- disruptions or inefficiencies in supply chain;
- Post’s or Bob Evans’ reliance on third party manufacturers for
certain of their respective products;
- changes in economic conditions, disruptions in the U.S. and
global capital and credit markets, and fluctuations in foreign
currency exchange rates;
- changes in estimates in critical accounting judgments and
changes to or new laws and regulations affecting Post’s or Bob
Evans’ business;
- the impact of the United Kingdom’s exit from the European Union
(commonly known as “Brexit”) on Post or Bob Evans and their
respective operations;
- changes in weather conditions, natural disasters, disease
outbreaks and other events beyond Post’s or Bob Evans’
control;
- loss of key employees, labor strikes, work stoppages or
unionization efforts;
- losses or increased funding and expenses related to Post’s or
Bob Evans’ qualified pension and other post-retirement plans;
- business disruptions caused by information technology failures
and/or technology hacking;
- Post’s or Bob Evans’ ability to protect their respective
intellectual property and other assets;
- Post’s ability to successfully operate its international
operations in compliance with applicable laws and regulations;
- significant differences in Post’s or Bob Evans’ actual
operating results from their respective guidance regarding their
respective future performance;
- Post’s or Bob Evans’ ability to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act of 2002, including with
respect to acquired businesses; and
- other risks and uncertainties described in Post’s and Bob
Evans’ filings with the Securities and Exchange Commission.
Post and Bob Evans caution readers not to place undue reliance
on any forward-looking statements. These forward-looking statements
represent Post’s and Bob Evans’ judgment as of the date of this
release, and Post and Bob Evans undertake no obligation to update
or revise them unless otherwise required by law.
Additional Information and Where to Find It
In connection with the proposed merger, Bob Evans intends to
file a preliminary proxy statement on Schedule 14A with the
Securities and Exchange Commission (the “SEC”). BOB EVANS
STOCKHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT AND
ANY OTHER RELEVANT DOCUMENTS, INCLUDING ANY DEFINITIVE PROXY
STATEMENT, FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION WITH RESPECT TO THE PROPOSED MERGER BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The
definitive proxy statement will be mailed to stockholders of Bob
Evans. Investors and security holders will be able to obtain the
documents (when they become available) free of charge at the SEC’s
website, http://www.sec.gov. In addition, stockholders may obtain
free copies of the documents (when they become available) at the
Bob Evans website, www.bobevansgrocery.com, under the heading
“Investors.”
Participants in the Solicitation
Bob Evans, Post and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from the
stockholders of Bob Evans in connection with the proposed merger.
Information regarding Post’s directors and executive officers is
included in Post’s Annual Report on Form 10-K for the year ended
September 30, 2016, filed with the SEC on November 18, 2016 and the
proxy statement for Post’s 2017 Annual Meeting of Shareholders,
filed with the SEC on December 8, 2016. Information regarding Bob
Evans’ directors and executive officers is included in the Bob
Evans Annual Report on Form 10-K for the fiscal year ended April
28, 2017, filed with the SEC on June 15, 2017 and the proxy
statement for Bob Evans’ 2017 Annual Meeting of Stockholders, filed
with the SEC on July 14, 2017. Additional information regarding the
interests of such participants in the solicitation of proxies in
respect of the proposed merger will be included in the proxy
statement and other relevant materials to be filed with the SEC
when they become available.
About Post Holdings, Inc.
Post Holdings, Inc., headquartered in St. Louis, Missouri, is a
consumer packaged goods holding company operating in the
center-of-the-store, foodservice, food ingredient, private label,
refrigerated and active nutrition food categories. Through its Post
Consumer Brands business, Post is a leader in the North American
ready-to-eat cereal category and offers a broad portfolio that
includes recognized brands such as Honey Bunches of Oats®,
Pebbles™, Great Grains® and Malt-O-Meal® bag cereal as well as
granola and hot wheat products. Post is also a leader in the United
Kingdom ready-to-eat cereal category with Weetabix® and Alpen®.
Post’s Michael Foods Group supplies value-added egg products,
refrigerated potato products, cheese and other dairy case products
and dry pasta products to the foodservice, food ingredient and
private label retail channels and markets retail brands including
All Whites®, Better’n Eggs®, Simply Potatoes® and Crystal Farms®.
Post’s Active Nutrition platform aids consumers in adopting
healthier lifestyles through brands such as Premier Protein®,
PowerBar® and Dymatize®. Post’s Private Brands Group manufactures
private label peanut butter and other nut butters, dried fruits and
baking and snacking nuts. For more information, visit
www.postholdings.com.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. is a leading producer and distributor of
refrigerated potato, pasta and vegetable-based side dishes, pork
sausage, and a variety of refrigerated and frozen convenience food
items under the Bob Evans and Owens brand names. For more
information about Bob Evans Farms, Inc., visit
www.bobevansgrocery.com.
BOBE-G
Post Investor Relations Contact:
Brad Harper(314) 644-7626brad.harper@postholdings.com
Bob Evans Investor Relations Contact:
Scott Van Winkle(617) 956-6736scott.vanwinkle@icrinc.com
Bob Evans Media Relations Contact:
Elizabeth Sedlock(636) 699-9554esedlock@sedlockpartners.com
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