Bob Evans Farms’ shares soared Tuesday after Post Holding Inc., the company that makes Honey Bunches of Oats and Grape-Nuts cereals, announced it was buying the company for about $1.5 billion.
Bob Evans’ stock rose more than 6 percent to $77.67 in afternoon trading and was down slightly Wednesday morning to 77.41, which is still higher than Post’s offer of $77 per share.
“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, in a statement. “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.”
In January, with activist investor Thomas Sandell pushing for change, Bob Evans announced it was splitting the company, selling its 522 Bob Evans restaurants to private-equity firm Golden Gate Capital in a $565 million transaction. The chain, founded in 1948, was sold off in May and taken private as Bob Evans Restaurants. The remaining part of the business—the one being sold now—is a packaged-foods company known as BEF Foods. Shortly after the announcement, BEF Foods said it was purchasing Pineland Farms Potato Co. for $115 million.
“The sale of Bob Evans Restaurants enables us to concentrate exclusively on BEF Foods, our fastest growing and most profitable segment,” CEO Saed Mohseni said in a release at the time.
Bob Evans Farms sells frozen foods in the retail segment, including vegetable-based side dishes, sandwiches, potato, pasta, and pork sausages under Bob Evans, Country Creek, Owens, and recently Pineland Farms brands. Bob Evans also has a foodservice business that accounts for about 35 percent of its sales volume. The foodservice unit sells sausage, sausage gravy, breakfast sandwiches, and side dishes.
“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,” the company said in a release.
The deal is expected to close by the end of Post’s second quarter of fiscal 2018. The company recently spent $1.8 billion to buy British brand Weetabix and also owns PowerBar, Crystal Farms, and Uncle Sam Cereal.
Columbus Business First reported that the sale would not result in relocation for the Central Ohio-based company. CEO Mike Townsley and CFO Mark Hood will head Post’s expanded refrigerated food business.
“We are pleased at the prospect of combining our complementary portfolios with Post Holdings,” said Townsley in a statement, “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 company has 1,247 total employees, with 240 salaried, Columbus Business First said. It reported annual net income of $126.5 million in its last report.
Upon closing, Post said it expects to combine its existing refrigerated retail egg, potato, and cheese business with Bob Evans, establishing a refrigerated retail business led by Townsley.
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 Townsley. 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.