Post Holdings To Buy Bob Evans Farms For Equity Value Of About $1.5 Bln

(RTTNews) - Post Holdings Inc. (POST) said that it agreed to acquire Bob Evans Farms Inc. (BOBE) for $77.00 per share. The equity value of the transaction is about $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

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.

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.

Bob Evans will continue its dividend payments in the ordinary course of business pending closing.

Post Holdings 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.

Post affirmed its fiscal 2017 Adjusted EBITDA guidance range of $975 million-$990 million, inclusive of Weetabix's contribution for the fourth quarter.