Cereal company Post Holdings has agreed to acquire refrigerated food company Bob Evans Farms for around $1.5 billion.
Founded in 1948, Bob Evans produces and distributes a range of refrigerated potato and pasta-based side dishes – including mashed potatoes and macaroni and cheese. It also manufactures a number of sausage products and frozen convenience foods like breakfast burritos and frozen biscuits with gravy.
The $1.5 billion valuation equates to an offering of $77 per share for around 20.3 million outstanding shares.
Post Holdings CEO Rob Vitale said: “We have enormous respect for Bob Evans’ success and are excited about the growth opportunities this combination will create. Combining with Bob Evans expands our portfolio of top brands and gives Post a leading position in the perimetre of the store. We look forward to welcoming the talented Bob Evans team to Post and working to create a successful future together.”
Bob Evans made net sales of $394.8 million in 2017, with operating income just over $30 million.
Post said the acquisition will “meaningfully enhance” its position in refrigerated side dishes – including the brand Simply Potatoes – and represents its first entry into breakfast sausages, having traditionally been better known for its breakfast cereals.
In April it agreed to acquire British cereal maker Weetabix.
Bob Evans CEO Mike Townsley added: “We are pleased to join the Post family, combining our complementary portfolios to the benefit of all of our stakeholders. 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.”
Upon closing of the acquisition, Townsley will lead a new refrigerated retail business within Post that combines Post’s existing retail egg, potato and cheese business with the operations of Bob Evans.
Michael Foods Group – part of Post – will continue to manage the company’s commercial foodservice business in the egg, potato and pasta categories. The group will remain under the guidance of CEO Jim Dwyer.
Post expects Bob Evans to contribute approximately $107 million in adjusted pre-tax earnings, with cost synergies of around $25 million a year by the third full fiscal year after completion. The purchase price represents a 15% premium on the 30-day volume-weighted average price of Bob Evans shares.
The global snacking, international cereal and noodles, plant-based foods and North American frozen breakfast business will be known as Kellanova – home to brands such as Pringles, MorningStar Farms and Nutri-Grain. Kellanova’s portfolio will also encompass cereal brands, including Frosties, Special K, Krave and Coco Pops.
Nestlé is piloting refillable vending machines for its Milo and Koko Krunch brands as part of its effort to explore solutions that help to reduce the need for disposable packaging. In collaboration with digital start-up Qyos by Algramo, the machines will be available at two retailers in Indonesia during a 4-6 month trial period.
Carlsberg has announced that Jacob Aarup-Andersen will join the company as chief executive officer, replacing Cees ’t Hart, who will retire by the end of Q3 2023. Since 2020, Aarup-Andersen has served as CEO of ISS, a global facility services company that operates in 60 countries.