Ohio-based Bob Evans Farms Inc. (NASDAQ: BOBE) said it sold Bob Evans Restaurants to private equity firm Golden Gate Capital for $565 million, plus the assumption of $40 to $50 million in debt. The company also said it simultaneously acquired Pineland Farms Potato Company (PFPC) for $115 million plus up to $25 million in milestone payments over two years.

The acquisition marks the beginning of a new era in which Bob Evans will focus exclusively on its BEF Foods business, the U.S. market leader in refrigerated dinner side dishes, and the Midwest market leader in sausage products.

The company estimates that net cash proceeds from the sale of its restaurants will be $475 to $485 million, which will be used to repay current debts and for the payment of a special dividend. Additionally, the company entered into a definitive agreement for the purchase of PFPC for $115 million.

The two transformational transactions came after a strategic review of alternatives by the company’s board of directors.

“Today we announced two transactions that are a major step in our strategic transformation that we believe will continue Bob Evans’ history of success,” said President and CEO Saed Mohseni. “The sale of Bob Evans Restaurants enables us to concentrate exclusively on BEF Foods, our fastest growing and most profitable segment. We believe this focus will result in higher returns for our shareholders and, as a more focused private business, Bob Evans Restaurants will be better able to deliver on its brand promise of providing quality food and hospitality to every guest at every meal.”

“I am also pleased that we have signed an agreement to purchase PFPC. We believe this transaction will better enable BEF Foods to continue growing and innovating. The acquisition of PFPC not only increases our side-dish production capacity, it provides capability to produce and sell diced and shredded potato products in both the retail and foodservice channels,” continued Mohseni.

The acquisition also diversifies the company’s production capability by adding a second state-of-the-art potato processing facility with 180 million pounds of capacity, 50 million pounds of which are expected to come online in April 2017.

PFPC, founded in 1997, is said to come with a 900 acre potato farm and is surrounded by an additional 55,000+ acres of annual potato production. Its close proximity to tens of thousands of acres of potato production is particularly attractive as it greatly reduces transportation costs.

“BEF Food’s side-dish product mix is expected to reach 66% of sales volume by 2020, and the PFPC acquisition mitigates the need for near term capital spending for additional capacity to meet our growth targets. Following the completion of these transactions, Bob Evans will be focused exclusively on sales and profit growth of BEF Foods,” Mohseni added.

“We believe these transactions are the best options for creating shareholder value and providing for the future success of these two great businesses,” said Bov Evans Executive Chairman Doug Benham. “Following the closing of the Bob Evans Restaurants transaction, Mike Townsley, President, BEF Foods, will assume the role of President and Chief Executive Officer of Bob Evans.”

The new Bob Evans, further strengthened by the manufacturing and intellectual capital of PFPC, is positioned to become a higher profit and higher growth company that is expected to provide better returns to shareholders and an enhanced product line for customers.

“Bob Evans Restaurants is an exceptional brand, uniquely differentiated by its deep-rooted heritage of farm-fresh food and heartfelt hospitality,” said Josh Cohen, Managing Director at Golden Gate Capital. “As an independent company partnered with Golden Gate Capital, Bob Evans Restaurants will be well-positioned to sharpen its focus on enhancing the business, with increased flexibility and resources to grow the company for the long-term.”

At the end of October 2016, Bob Evans Restaurants owned and operated 522 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the U.S.

Golden Gate Capital is a San Francisco-based private equity investment firm with over $15 billion of capital under management. Representative restaurant/retail investments sponsored by the firm include Red Lobster, California Pizza Kitchen, On The Border Mexican Grill & Cantina, Eddie Bauer, Express, Pacific Sunwear, Payless ShoeSource and Zales.

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