Sandell Asset Management's latest comments about proposed settlement with Bob Evans Farms omits several details, including Sandell's demand that BEF reimburse up to US$2M of Sandell's expenses, BEF says
NEW ALBANY, Ohio
July 8, 2014
– Bob Evans Farms, Inc. (BOBE) today provided the following information for stockholders to help ensure they are fully aware of the Company's good faith efforts with respect to settlement discussions with Sandell Asset Management Corp. and its affiliates.
"Sandell today chose to issue a press release omitting details of both Sandell's and the Company's actual proposals to settle the proxy contest, which was initiated by Sandell," said Steven A. Davis, Chairman and CEO of Bob Evans. "Sandell did not disclose that its latest proposal would have required, among other things, that two-thirds of the Board and its entire Finance Committee be comprised of either new directors or directors with only recent experience with the Company's business operations, strategy and customers. Under Sandell's, proposal, only two of the Board's eleven independent directors would have had more than three years of experience with the Company. Additionally, Sandell demanded that the Company reimburse up to $2 million of Sandell's expenses."
The Board does not believe the Sandell proposal is in the best interests of all stockholders. Moreover, stockholders should be aware that contrary to what Sandell says, the Board has continued to try to reach a constructive resolution to avoid a costly and divisive proxy contest. Rather than responding in good faith to the Board's latest proposal, Sandell simply issued a press release more telling in its omissions than its facts. As disclosed in June, the Board proposed to Sandell to name two of Sandell's nominees to the Board and to have them join the Finance Committee, which would be charged with undertaking a full review of the Company's strategy. However, Sandell rejected this offer, proposing instead that the Company not only name four of the Sandell director nominees to the Board, but also require that the Board, without any further review, commit to implement Sandell's full agenda, including all of Sandell's financial proposals.
On July 2, 2014, Sandell's representatives contacted the Company's representatives with an "exploding" settlement offer -- expiring at the time that the Company announces its fourth quarter results on July 8, 2014 -- that would result in two-thirds of the Board and all of the Finance Committee being comprised of directors who joined in 2014. Under Sandell's proposal, the Company would be required to add five director nominees selected solely by Sandell and three directors who joined the Board prior to 2014 would have to resign. In addition, Sandell demanded that the Finance Committee consist solely of two Sandell nominees and two of the incumbent directors added to the Board in April.
In response, on July 3, 2014, the Company proposed a settlement that would result in three of Sandell's nominees being added to the Board, such that, following the Annual Meeting, Sandell's nominees would constitute one quarter of the Board. At that point, fully half of the Board, including a majority of the independent directors, would have been added to the Board this year, ensuring another fresh and independent review of Sandell's proposals. Additionally, as part of the settlement, the proposal included adding two Sandell nominees to the Finance Committee, replacing two directors who are retiring and are members of that Committee, resulting in a six person Finance Committee, half of which would have been new to the Board this year. Under this proposal, the Finance Committee would then be charged with reviewing and making recommendations to the full Board with respect to Sandell's proposals, as well as other opportunities to enhance stockholder value, and would have the ability to retain an additional investment bank. Furthermore, the reconstituted Board would consider whether to separate the positions of CEO and Chairman of the Board.
Davis concluded, "Mr. Sandell should focus on a constructive resolution rather than pursuing an expensive and divisive proxy campaign. The Company and its Board remains open to finding a settlement solution that is in the best interest of ALL stockholders."
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the third fiscal quarter (January 24, 2014), Bob Evans Restaurants owned and operated 562 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit www.bobevans.com.