Sandell Asset Management Presentation on Bob Evans Farms Inc (BOBE): Sets a $90 Target Price

Tom Sandell and his fund Sandell Asset Management have issued a presentation explaining their position on Bob Evans Farms Inc (NASDAQ:BOBE). Moreover, in the filing with the Securities and Exchange Commission, the investors revealed a stake, which contains around 2.08 million shares, slightly up from approximately 2.0 million shares held previously.

Bob Evans Farms

In the presentation, Sandell said that the company has underperformed mainly because of the failed policies and a wasteful culture promoted by an entrenched Board. Bob Evans Farms Inc (NASDAQ:BOBE) has very high SG&A expenses, repeated reductions in its guidances, and over $900 million worth of real estate value not reflected in its stock price.

In addition, the investor considers that the Board of Directors is also to be blamed for the company’s weak results. Sandell has invoked the longevity of directors’ serving time on the board (14 years on average).  The whole board is connected to the chairman and CEO, Steven Davis and among themselves, which creates a conflict.

“To address these problems and best position Bob Evans to deliver enhanced shareholder value, the Board needs a fresh, independent, highly- qualified Board of Directors that is able to provide effective management oversight and bring new perspectives and ideas to the Company,” the presentation said.

Earlier today, Sandell issued a press release proposing eight independent directors to be elected to the company’s board. The candidates proposed by the fund are highly qualified and have experience in restaurant operations, corporate governance, finance, etc.

Sandell also proposed a bunch of measures that could enhance the value of the company. From the operational point of view, the fund said that Bob Evans Farms Inc (NASDAQ:BOBE) has to re-focus its brand to expand its traffic and same store sales in the long-term. The capital spending of the company needs to be scrutinized and a new culture of more prudent capital budgeting should be installed. The value of the real estate also has to be unlock, to increase the stock price of the company. If this plan is realized, Sandell considers that the stock price of the company could amount to $90 per share, and Bob Evans could realize over $6.00 in annual EPS power.

The full presentation can be accessed below:

Sandell Asset Management Presentation on Bob Evans Farms

Earlier today, Tom Sandell has been interviewed by CNBC regarding his views on Bob Evans Farms Inc (NASDAQ:BOBE). He said that “”The company has underperformed their peers by 130% in the equity markets over the past five years and they have a corporate waste, for example their operating margins are 500 basis points lower than the peer group.”  Moreover, Mr. Sandell has also mentioned his $90 target price for the company’s stock.

Disclosure: none

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