Jan 13 Activist investor Barington Capital Group
said on Monday it was disappointed with a recent plan by Darden
Restaurants Inc to spin off its Red Lobster chain to
enhance shareholder value.
Barington, which leads a shareholders' group that owns a
stake of more than 2 percent in the chain, said in a statement
it views Darden's plan "as incomplete and inadequate."
Darden could not be reached immediately for comment.
New York-based Barington, which has previously urged Darden
management to break up the company and explore spinning off its
real estate properties, said it was particularly disappointed
that Darden's plan failed to unlock value from the company's
real estate holdings.
Barington estimates that Darden's real estate could be worth
Barington has recommended Darden explore creating a publicly
traded real estate investment trust to get full value for the
real estate assets.
Barington also said it believes that just separating Red
Lobster from the rest of Darden will still leave the company
with too many brands.
"Unfortunately, Darden's proposed plan appears to us to be
more of an attempt to do the minimum necessary to maintain the
status quo than an effort to formulate a truly comprehensive
strategy to improve long-term shareholder value," the fund said
Barington recommends that Darden split into two companies:
one for Olive Garden and Red Lobster, and the other for its
higher-growth brands, including LongHorn Steakhouse, The Capital
Grille, Yard House and Bahama Breeze.
Darden, which manages eight restaurant brands, has become
too large and complex to compete with its rivals, Barington has
Activist investor Starboard Value LP has also come out
publicly in favor of pushing for change at Darden.
(Reporting by Olivia Oran; Editing by Jeffrey Benkoe)