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Bob Evans Farms Merger Proxy Omissions Securities Class Action

Even a member of the Bob Evans Farms board of directors did not vote for its proposed merger with Post Holdings, the complaint for this class action alleges, because he was not sure that the merger consideration was greater than what the company could achieve on its own with a little more time, and because, as the company’s own Proxy Statement said, “the quality of the board’s process leading up to the merger” failed to convince him.

The class for this action is the public holders of common stock for Bob Evans Farms, Inc.

Bob Evans Farms is a public food company, founded in 1948, that specializes in pork sausage, refrigerated potato, pasta, and vegetable-based side dishes, and refrigerated and frozen convenience foods under several brand names. The company’s food service business is growing, and the complaint claims that it now represents 35% of volume.

The complaint for this class action alleges that the company is “well-positioned for financial growth” and that analysts give it an average target price for share of $79.67, with a high of $85.00. The merger offers compensation of only $77 per share.

How does the company figure that the price is fair? That’s the problem: The complaint alleges that the Proxy, filed with the Securities and Exchange Commission (SEC) on October 24, 2017, omits required and material information that would let shareholders properly judge the proposed deal.

First, the complaint says, its two sets of financial projections violate Regulation G and SEC Rule 14a-9 by not providing enough information about how they were calculated and by not providing a reconciliation of non-GAAP projections with GAAP measures. The complaint quotes former a SEC Chairwoman about “troublesome practices which can make non-GAAP disclosures misleading: the lack of equal or greater prominence for GAAP measures; exclusion of normal, recurring cash operating expenses; individually tailored non-GAAP revenues; lack of consistency; cherry-picking; and the use of cash per share data.”

Second, the complaint takes issue with other of financial advisor JP Morgan’s calculations and claims that the lack of information makes them, and its fairness opinion, questionable.

Third, the complaint alleges that the Proxy is inadequate because it does not disclose information about the nature and timing of negotiations for post-merger employment for the company’s executives. The Proxy claims that post-merger roles and compensation were not discussed, but the complaint quotes a press report as saying that Mike Townsley, the company’s current president and CEO, would lead the combined companies’ refrigerated retail business.

The complaint claims these omissions or misleading statements in the Proxy violate Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

Bob Evans Farms Merger Proxy Omissions Securities Complaint

October 31, 2017

Even a member of the Bob Evans Farms board of directors did not vote for its proposed merger with Post Holdings, the complaint for this class action alleges, because he was not sure that the merger consideration was greater than what the company could achieve on its own with a little more time. The complaint alleges that the merger compensation is inadequate and that the Proxy does not supply enough information for shareholders to fully evaluate the deal, omitting information about how calculations were made, non-GAAP measures, and the process of discussing post-merger employment for company officrs. 

bob_evans_farms_securities_complaint.pdf

Case Event History

Bob Evans Farms Merger Proxy Omissions Securities Complaint

October 31, 2017

Even a member of the Bob Evans Farms board of directors did not vote for its proposed merger with Post Holdings, the complaint for this class action alleges, because he was not sure that the merger consideration was greater than what the company could achieve on its own with a little more time. The complaint alleges that the merger compensation is inadequate and that the Proxy does not supply enough information for shareholders to fully evaluate the deal, omitting information about how calculations were made, non-GAAP measures, and the process of discussing post-merger employment for company officrs. 

bob_evans_farms_securities_complaint.pdf
Tags: Mergers or Acquisitions, Providing False or Misleading Information, Proxy Statement, Securities