12-9-13 11:35 AM EST | Email Article

Activist investor Sandell Asset Management said it intends to file for a consent solicitation to make a number of operational changes at Bob Evans Farms Inc. (BOBE), including a possible spinoff of the Bob Evans food unit.

Sandell is the company's second-largest shareholder, with a 6.5% stake.

The hedge fund previously called on Bob Evans to transform its business as the company's shares have significantly underperformed peers in recent years. Sandell cited the company's "abysmal financial results" in the second quarter and deteriorating talks with the board in an open letter to shareholders.

"The financial results that Bob Evans recently reported paint a very troubling picture regarding not only the company's operating structure but the capital allocation decisions made by management," Sandell said.

Sandell said it has made repeated attempts over a five-month period to discuss ideas to unlock $80 per share of value in the company, but management and the board have taken no action on its suggestions.

A representative from Bob Evans declined to comment beyond referring to the company's comments last week on its earnings call. Chairman and CEO Steven A. Davis said the board vetted the suggestions with its outside advisors and unanimously concluded they aren't in the best interests of the company or its shareholders.

Previously, Sandell asked the company to consider a spinoff of its food unit for a potential $1.08 billion in proceeds. Sandell also suggested a share buyback plan after the spinoff, as well as a possible sale and leaseback of its restaurants.

The hedge fund said it learned at least one private equity group approached the company with an acquisition proposal, which was dismissed by Chairman and Chief Executive Steven Davis, signaling "a complete governance breakdown."

"As such, our consent solicitation will be aimed at swiftly empowering shareholders to seek change at the company," the investor said. "Importantly, shareholders do not have to wait until the company's annual meeting to effect change, as they can take action by written consent."

Bob Evans shares closed Friday at $51.31, with the stock up 28% year-to-date.

Write to Everdeen Mason at everdeen.mason@wsj.com


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(END) Dow Jones Newswires

December 09, 2013 11:35 ET (16:35 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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Morningstar - 2013/12/9 - Sandell to File Consent Solicitation at Bob Evans
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