Bob Evans Farms Inc (NASDAQ:BOBE) has announced that it will be selling its restaurant business to Golden Gate Capital.
The deal will have Bob Evans Farms Inc selling Bob Evans Restaurants to Golden Gate Capital for $565 million. Golden Gate Capital will also assume some net working capital liabilities when the deal closes that are valued at $40 million to $50 million.
Bob Evans Farms Inc says that cash proceeds after taxes and transaction costs will range from $475 million to $485 million. It plans to use this money to pay down its current debt. It will also use it for a special dividend for shareholders.
Bob Evans Farms Inc is planning to pay its shareholders a special dividend of $150 million following the sale of its restaurant division. This will result in the special dividend being $7.50 per share. It expects this dividend to be declared within 60 days after the deal is completed.
As part of its same announcement that it is leaving the restaurant business, Bob Evans Farms Inc also announced that it is acquiring Pineland Farms Potato Company. It will pay $115 million for the company with a possible additional payment of $25 million based on performance after 24 months.
Following the acquisition of Pineland Farms Potato Company, Bob Evans Farms Inc will switch its focus to its BEF Foods business. BOBE says it is already the market share leader in refrigerated dinner side dishes. It also points out that it is the market share leader in sausage products in its core Midwest markets.
Bob Evans Farms Inc also says it expects its current guidance for fiscal 2017 to stay true, so long as the two above transactions are completed by April 28, 2017. It expects earnings per share to range from $2.15 to $2.30. Wall Street is expecting earnings per share of $2.26 for the year.
BOBE stock was up 20% as of Wednesday morning.