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Bob Evans Farms, Inc., (Nasdaq:BOBE) today mailed a letter from its Board of Directors to the Company’s stockholders, discussing the “unsustainable economic agenda” and “non-substantive operational suggestions” put forward by Sandell Asset Management, which is attempting to turn over control of the company at the Bob Evans 2014 Annual Meeting on August 20th.
The letter stated that the “Board, after careful analysis, has determined that the Sandell agenda would jeopardize long-term sustainable value creation at Bob Evans and that it is NOT in the best interests of the Company or its stockholders.”
The letter further stated: “In just the past two weeks, perhaps recognizing that its economic proposals do not make sense for Bob Evans, Sandell has hastily prepared suggestions for ways the Company can operate its business. While the Bob Evans Board welcomes ideas for operational improvements from stockholders, customers and employees, it finds Sandell’s ideas of limited utility, since they either lack substance or already are being implemented by the Company.” In contrast to Sandell’s non-substantive operational suggestions, the letter presented a digest of operational initiatives the Company has undertaken in key areas, including: revising brand position and improving customer experience; simplifying and enhancing the menu; optimizing marketing effectiveness; improving restaurant margins, and developing future franchising opportunities.
In the letter, Lead Independent Director Michael Gasser and Chairman and Chief Executive Officer Steven Davis, on behalf of the Board of Directors, urged stockholders to elect the nominees recommended by the Board. They noted that the Board’s nominees are highly qualified individuals who engage in a regular and rigorous review of all ideas for improving shareholder value, with the objective of adhering to a strategy that is sustainable, disciplined, and responsible. It stated that the Board will continue to: 1) drive the profitable growth of the existing businesses, 2) employ a balanced approach to the return of meaningful capital to stockholders and investment in growth, and 3) regularly and proactively review strategy, while continually engaging with stockholders.
Having been a long-time Bob Evans shareholder, I would argue that any takeover proposal should be rejected. I personally believe that Bob Evans is one of the most well-conceived, vertically integrated companies in America.
There is nothing innovative about Sandell’s proposals, nor are they likely to be beneficial in the long run. Take, for instance, simplifying the menu. Doing so in a restaurant that features breakfast all day, is nearly impossible, because, unlike lunch and dinner, people like their ham and eggs served in a wide variety of ways. If it’s not on the menu, they will ask to have it served their way. So, put it on the menu.
By the way, the only problem I have with Bob Evans restaurants (and the company is much more than restaurants) is that it is difficult to find a parking space around them at meal time.