Bob Evans Caving to Activist Sandell?

We noted the other week that Sandell Asset Management was that much closer to forcing Bob Evans into monetizing its real estate. We just didn’t realize it was quite this close. Bob Evans is looking to sell off a chunk of its real estate later this year.

All likely part of Sandell’s prodding since it got four board seats back in August. Bob Evans is also open to separating its consumer goods and restaurants business.

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The two key interim options (related to its real estate) is to form a REIT or do a sale-leaseback. The real estate value could be worth as much as $700 million, in which case, you’ve got a core restaurant and packaged food business valued at $400 million and generating $100 million in EBITDA.

We’ve still got several months before the company lays out its ultimate plans. But the overarching plan is to get the real estate monetization finalized and then deal with a separation of the two businesses. In terms of real estate, it’ll likely consider a REIT since that’ll keep the tax bill low, but only a portion of its real estate qualifies. it owns 460 locations and would likely spin 30% to 60% of that into a REIT.

Bob Evans is still a relatively high conviction play for Sandell, but the shares are still down over 16% since Sandell went active in 2013. It’s still a wait-and-see game. Sandell is in too deep to give up now, but it’s not too late for others.