Sandell Says It Won Five Seats on Bob Evans’ Board

Activist investor Sandell Asset Management Corp. said it won at least five seats on Bob Evans Farms Inc.’s board after an 11-month proxy fight in which it has pushed to monetize assets of the restaurant chain.

Five of Sandell’s eight nominees have been elected as directors, New York-based Sandell said in a statement today, citing preliminary voting results. The restaurant chain’s annual shareholder meeting was held in New Albany, Ohio, where it is based. Sandell, which owns about 7.6 percent of Bob Evans, now controls 42 percent of the company’s 12-member board.

Based on the advice of its proxy solicitor, Bob Evans believes its own nominees will make up a majority of the board, the restaurant chain said in a statement. The company also today said it’s increasing its share repurchase authorization to as much as $150 million until the end of fiscal 2016.

The chain, which has about 560 restaurants and sells packaged foods in grocery stores, replaced three board members in April with new independent directors after Sandell said its management was ineffective. The investor has also pressured Bob Evans to spin off its packaged-food business, sell real estate and buy back shares -- moves that would return cash to shareholders.

“It’s still an open question whether or not, for example, there’s going to be a spinoff or there’s going to be a series of sale leasebacks,” said John Shea, chief executive officer of corporate-governance researcher Proxy Mosaic in New York. “Sale leasebacks are probably the easiest to accomplish.”

Sandell Campaign

Sandell began pushing for changes at the chain in September, sending a letter to the board. The company’s property and buildings may be worth more than $900 million, Sandell has said.

On April 25, Norwegian Cruise Line Chief Executive Officer Kevin Sheehan, former TJX Cos. Chief Information Officer Kathy Lane and Compass Marketing co-CEO Larry McWilliams were appointed to the board. Larry Corbin and Robert Lucas are stepping down, while Gordon Gee has already resigned.

The retailer in July reported fiscal 2014 revenue that fell 0.1 percent to $1.33 billion as severe winter weather hurt its restaurants and higher pork costs cut into profit for its foods business.

Growth Plans

Earlier this month, Bob Evans filed an investor presentation highlighting its growth plans. The family-dining chain has been remodeling stores and is trying to boost carryout sales. It also said that Sandell’s agenda isn’t in the best interest of shareholders and “is a misleading attempt to generate short-sighted profit with no guarantees.”

Other retailers, including Darden Restaurants Inc., have recently faced activist investor pressure and proxy fights. After criticism about the company’s turnaround strategy from Starboard Value LP and Barington Capital Group LP, Darden sold its Red Lobster chain and CEO Clarence Otis said he’d step down.

Bob Evans rose 0.7 percent to $48.49 at the close in New York. The shares have fallen 4.2 percent this year and 15 percent since Sept. 23, the day before Sandell began its campaign.

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