Mimi’s Cafe Abandons IPO Plans, Accepts Acquisition Offer From Bob Evans Farms
On the verge of going public, Mimi’s Cafe Inc. on Monday said it had accepted a better offer.
The Tustin-based casual dining chain said it agreed to be acquired for $103.3 million in cash by restaurant chain and sausage maker Bob Evans Farms Inc.
Bob Evans Farms, a name synonymous with breakfast sausage in the Midwest, first approached Mimi’s Cafe three years ago about a possible sale. Then, last month, Mimi’s announced it would sell $75 million of stock in an initial offering. Its plan was to price its shares Monday, and “the urgency of the IPO” created a deadline for Bob Evans to close the deal, Mimi’s Cafe Chief Financial Officer Ed Bartholemy said.
Columbus, Ohio-based Bob Evans Farms said it would also assume $78.7 million of Mimi’s debt.
Mimi’s Cafe, which serves up large portions of American comfort food in faux French country settings, has 81 restaurants in 10 Western states, including 47 in California. The chain was founded in 1978 in Anaheim by Thomas M. Simms, Mimi’s chairman, and his father, Arthur Simms, a longtime restaurateur who ran the MGM commissary during the 1950s.
“Mimi’s New Orleans cafe, European bistro concept is extremely unique,” said Stewart K. Owens, chief executive of Bob Evans Farms. He noted that “Mimi’s has been growing historically at about 18% to 20%” a year.
Revenue was $240.5 million in 2003, up from $48.4 million in 1995, according to Securities and Exchange Commission filings. In the first three months of this year, revenue climbed 22% to $68.3 million.
Bob Evans Farms owns 561 restaurants in 22 states in the Midwest, the mid-Atlantic states and the Southeast. It’s still considered a regional chain, however, and is eager to expand beyond the breakfast and lunch trade.
In Mimi’s Cafe, analysts said, Bob Evans will get a growing chain in the West that can provide a successful model for dinnertime traffic.
In turn, Mimi’s Cafe will get the financial backing it needs to continue expanding without going public. The company will continue to operate under its current management and will retain the Mimi’s Cafe name.
“They don’t have to deal with investors and analysts and the extra costs of being a publicly traded company,” said analyst Jonathan Waite of KeyBanc Capital Markets.
Bob Evans, a maker of about 40 kinds of pork sausage and ham products, has been rocked by soaring pork prices, said analyst William Hamilton, with Pershing. The price hike is due partly to higher demand for beef and pork as a result of the popularity of the Atkins diet. Ironically, this hurt sales at Bob Evans restaurants after they were forced to raise prices.
Restaurants account for 80% of Bob Evans’ sales. In the fiscal year that ended in April, Bob Evans earned $72 million, or $2.03 a share, down from $75.1 million and $2.10 a share a year earlier. The company lowered its 2005 profit estimate last month to $1.80 to $2 a share because of rising hog prices and slower sales.
Bartholemy said Mimi’s Cafe executives were sure the company would have had a successful IPO. But Bob Evans’ offer will allow Mimi’s Cafe to keep growing, he said, adding that the chain plans to open as many as 12 restaurants this year.
Bob Evans shares fell 55 cents Monday to $26.78 on Nasdaq.
