Bob Evans Farms Inc. remained unmoved by new demands from an activist investor to sell off its real estate, spin off its packaged-foods division, or buy back significant amounts of stock, even though the shareholder announced Monday it would seek a consent solicitation.
Sandell Asset Management, which owns about 6.5 percent of Bob Evans Farms Inc.’s publicly traded shares, announced in an open letter to Bob Evans that it would intensify its efforts to drive change at the restaurant company through a consent solicitation. Under such a motion, a shareholder of any public company may put a proposal up for a vote of all shareholders without having to wait for the next annual meeting. Securities analyst Chris O’Cull of KeyBanc Capital Markets surmised in a research note that the solicitation would call for changes to Bob Evans’ board of directors and to the rules that dictate how often a director can be replaced.
New York-based Sandell’s shareholder letter to Bob Evans expressed grievances with the restaurant company’s “abysmal” earnings reported last week for the second quarter of its 2014 fiscal year and management’s “near indifference” to the investor’s prior proposals to sell off real estate, spin off Bob Evans Foods, and buy back large amounts of stock.
Columbus, Ohio-based Bob Evans Farms said in a statement released the same day that its board of directors unanimously rejected Sandell’s proposals after careful consideration with its independent financial advisors at Lazard Ltd.
“Bob Evans Farms Inc. is always engaged with its shareholders and actively participates in discussions with current and potential investors,” chief executive Steve Davis said in the statement. “However, what we have not, and will not, undertake are financial-engineering tactics that place our company’s ability to deliver long-term shareholder value at unnecessary risk.”