Golden Gate Capital has agreed to buy Bob Evans Restaurants from Bob Evans Farms Inc. (Nasdaq: BOBE) for $565 million plus debt. The deal comes as private equity firms show a renewed interest in restaurant chains with growth potential.
Separately, Bob Evans said it will purchase Pineland Farms Potato Co. for up to $140 million. Both transactions will allow the latter to focus on its BEF Foods packaged foods business and concludes the company’s strategic review process.
“The sale of Bob Evans Restaurants enables us to concentrate exclusively on BEF Foods, our fastest growing and most profitable segment,” says Bob Evans CEO Saed Mohseni. BEF Foods makes frozen packaged products such as breakfast sausages and macaroni and cheese under the Bob Evans and Owens brands.
The restaurant division operates 522 full service eateries in 18 states, mostly in the Midwest and Southeast. The menu ranges from a farmer's choice breakfast to a pot roast dinner.
Pineland Farms, located in Mars Hill, Maine, produces packaged mashed potatoes, diced potatoes, along with various cheeses that are sold to restaurants and retailers. Pineland and Bob Evans have had a business relationship since 2002. New Albany, Ohio-based Bob Evans will initially pay Pineland Farms $115 and up to another $25 million if the target reaches certain financial goals.
San Francisco-based Golden Gate holds investments in more than 35 companies across sectors that include: industrials, financial services, technology, retail and restaurants. In 2014, Golden Gate acquired Red Lobster from Darden Restaurants Inc. (NYSE: DRI) for $2.1 billion. The firm has also invested in California Pizza Kitchen.
PE firms have been showing strong interest in restaurant deals. A group that includes the Caryle Group LP (Nasdaq: CG) is buying a stake in McDonald’s Corp. (NYSE: MCD) China business; General Atlantic has taken a minority stake in Joe & the Juice; Roark Capital bought a majority stake in Jimmy John’s Sandwiches.
J.P. Morgan Securities LLC (NYSE: JPM) is advising Bob Evans on the restaurants sale. UBS Investment Bank and Ropes & Gray are advising Golden Gate.