Bob Evans Farms sold to Post Holdings

St. Louis, Missouri and New Albany, Ohio – Post Holdings, Inc. (NYSE:POST) (“Post”) and Bob Evans Farms, Inc. (NASDAQ:BOBE) (“Bob Evans”) today announced that they have entered into a definitive agreement in which Post will acquire Bob Evans for $77.00 per share. The highly complementary combination will significantly strengthen Post’s portfolio of brands, expand choices for customers and increase Post’s presence in higher growth categories of the packaged food market.

Founded in 1948, Bob Evans is a leading producer and distributor of refrigerated potato, pasta and vegetable-based side dishes, pork sausage, and a variety of refrigerated and frozen convenience food items under the Bob Evans, Owens, Country Creek and Pineland Farms brands. Bob Evans also has a growing foodservice business, representing approximately 35% of volume. The foodservice business sells a range of products, including sausage, sausage gravy, breakfast sandwiches and side dishes, which are made to match individual customer specifications.

The addition of Bob Evans’ highly complementary portfolio of brands and products will meaningfully enhance Post’s refrigerated side dish offering, provide Post with a presence in breakfast sausage and will immediately provide Post with a leading position in the higher growth perimeter of the store. The combination with Bob Evans will also strengthen Post’s presence in commercial foodservice, create opportunities for future growth and enhance Post’s position as one of North America’s largest packaged food companies.

“We have enormous respect for Bob Evans’ success and are excited about the growth opportunities this combination will create,” said Rob Vitale, President and Chief Executive Officer of Post Holdings. “Combining with Bob Evans expands our portfolio of top brands and gives Post a leading position in the perimeter of the store. We look forward to welcoming the talented Bob Evans team to Post and working to create a successful future together.”

“We are pleased at the prospect of combining our complementary portfolios with Post Holdings,” said Mike Townsley, President and Chief Executive Officer of Bob Evans Farms. “This transaction creates enhanced and certain value for our stockholders, while providing further resources and reach to deliver the Bob Evans experience to a broader audience of consumers and retailers. We are very proud of our 70 year history as a beloved brand and eager to begin this next chapter of growth.”

The transaction, which was approved by the Boards of Directors of both companies, is expected to be completed in the first calendar quarter of 2018, Post’s second quarter of fiscal year 2018, subject to customary closing conditions including the expiration of waiting periods under U.S. antitrust laws and approval of Bob Evans’ stockholders.

Organizational Structure
Upon closing of the acquisition, Post expects to combine its existing refrigerated retail egg, potato and cheese business with Bob Evans, establishing a refrigerated retail business within Post, which will be led by Mike Townsley, Bob Evans’ current President and CEO. Jim Dwyer will continue in his current role as President and CEO of the Michael Foods Group, managing the commercial foodservice egg, potato and pasta businesses, which will include the Bob Evans foodservice business.

Financial Details
The equity value of the transaction is approximately $1.5 billion. The acquisition purchase price represents a 15% premium on the 30 day volume weighted average price (VWAP) of Bob Evans shares. Post expects to finance the purchase with cash on hand and through borrowings under Post’s existing revolving credit facility. Bob Evans will continue its dividend payments in the ordinary course of business pending closing.

Post management expects Bob Evans to contribute approximately $107 million of adjusted EBITDA on an annual basis, which is the midpoint of Bob Evans’ current fiscal year 2018 adjusted EBITDA outlook. This outlook is before the realization of cost synergies which Post management expects to be approximately $25 million annually by the third full fiscal year post-closing, resulting from benefits of scale, shared administrative services and infrastructure optimization. One-time costs to achieve synergies are estimated to be approximately $25 million. The transaction is expected to be immediately accretive to Post’s top-line growth, Adjusted EBITDA margins and free cash flow, excluding one-time transaction expenses. For additional information regarding non-GAAP measures, such as Adjusted EBITDA, see the related explanations presented under “Use of Non-GAAP Measures” later in this release.

Outlook
Post management has affirmed its fiscal 2017 Adjusted EBITDA guidance range of $975-$990 million (inclusive of Weetabix’s contribution for the fourth quarter).

Post provides Adjusted EBITDA guidance and discloses its expectations as to the effect of the Bob Evans transaction on Post’s Adjusted EBITDA, including the expected annual contribution of Bob Evans, and free cash flow only on a non-GAAP basis and does not provide a reconciliation of its forward-looking non-GAAP guidance measures to the mostly directly comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for non-cash mark-to-market adjustments and cash settlements on interest rate and cross-currency swaps, provision for legal settlement, net foreign currency gains for purchase price of acquisition, transaction and integration costs, restructuring and plant closure costs, assets held for sale, mark-to-market adjustments on commodity hedges and other charges reflected in Post’s reconciliation of historical numbers, the amounts of which, based on historical experience, could be significant. For additional information regarding Post’s non-GAAP measures, see the related explanations presented under “Use of Non-GAAP Measures” later in this release.

Additional Information
UBS Investment Bank, Barclays, Goldman Sachs and Bank of America Merrill Lynch are acting as financial advisors to Post. J.P. Morgan Securities LLC acted as exclusive financial advisor to Bob Evans and provided a fairness opinion to its Board of Directors.