UPDATE 2-Starboard wants to put Darden's Red Lobster spinoff plan to vote
Feb 24 (Reuters) - Darden Restaurants Inc's plan to spin off its Red Lobster chain should be put to a shareholder vote, activist hedge fund Starboard Value LP said, drawing support from at least one other investor.
Darden said in December it would spin off or sell the floundering Red Lobster chain, bowing to pressure from hedge fund Barington Capital Group.
However, Barington on Monday came out in support of Starboard's proposal.
"We strongly support Starboard's efforts to give shareholders the right to voice their opinions on Darden's plan to sell or spin-off its Red Lobster business," James Mitarotonda, chief executive of Barington Capital Group said in a statement.
Starboard Value, which owns a 5.5 percent stake in Darden, has been urging the largest U.S. full-service restaurant operator to delay plans to spin off Red Lobster.
New York-based Barington had urged the company to split into two: with one company holding its more mature Olive Garden and Red Lobster brands, and another running its higher-growth chains including LongHorn Steakhouse, The Capital Grille, Yard House and Bahama Breeze.
The fund, which controls about 2 percent of Darden's shares, has previously criticized Darden's spin-off plan for not being aggressive enough.
Barington has also urged Darden to explore creating a publicly traded real estate investment trust (REIT) to "unlock the value" of its property holdings.
Starboard said on Monday it filed with the Securities and Exchange Commission seeking to call a special meeting of the company's shareholders to solicit support for a non-binding resolution urging the Darden board not to approve a Red Lobster separation.
The hedge fund must win the support of more than 50 percent of the shareholders to hold the special meeting.
In a letter to Darden last month, Starboard's Managing Member Jeffrey Smith called Darden's proposal regarding Red Lobster "a hurried, reactive attempt, in the face of shareholder pressure to do the bare minimum to appease shareholders."
Smith called on Darden to consider other options to boost share value, including slashing operating costs, improving restaurant results and divesting real estate.
Darden's shares were down 0.2 percent at $50.91 in afternoon trading on the New York Stock Exchange.
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