(Reuters) — Bob Evans Farms Inc (BOBE.O) said it would sell its restaurants unit to private-equity firm Golden Gate Capital for $565 million including debt, to focus on its refrigerated food business.
Shares of Bob Evans Farms jumped 13.7 percent to $54.50 in extended trading on Tuesday.
The company said it would get net proceeds of $475 million-$485 million from the deal, which it would use to pay a special dividend of $7.50 per share.
The move follows pressure from activist investor Sandell Asset Management Corp, which has been engaged in a proxy fight with Bob Evans since 2013 and has been asking the company to separate its food-products business, BEF Foods.
Bob Evans said in December, it had retained J.P. Morgan to evaluate opportunities for “value creation”.
The company also said BEF Foods business, which makes refrigerated dinner side dishes, will buy Pineland Farms Potato Co for $115 million.
Both transactions are expected to close by April 28.
Mike Townsley, president of BEF Foods, will be promoted to the position of president and chief executive of Bob Evans Farms, following the sale.
The restaurant operator also raised its share buyback to $100 million and said it would continue paying a quarterly dividend of 34 cents per share.