(Adds context, Darden comment)
March 19 Darden Restaurants Inc on
Wednesday urged shareholders not to support activist investor
Starboard Value LP's proposal for a special meeting to vote on
the company's plan to divest its Red Lobster chain.
Darden on Dec. 19 announced plans to spin off or sell its
705-restaurant Red Lobster chain. The company said the
transaction would not require a shareholder vote and could close
in the fiscal year beginning May 26.
Starboard, which owns about 5.5 percent of Darden shares,
said in late February that the plan to spin off Red Lobster
should be delayed and put to a shareholder vote.
Last week Starboard approached shareholders to suggest a
special meeting about Red Lobster. It must deliver written
requests from the holders of at least half of Darden's shares to
hold the meeting.
Starboard and fellow activist Barington Capital Group are
lobbying Darden to take bolder steps to improve performance at
the company, the biggest U.S. operator of full-service
Their calls took on more urgency after Darden warned earlier
this month that closely watched same-restaurant sales at Red
Lobster and Olive Garden, its marquee chains, had fallen sharply
in the latest quarter due in part to severe winter weather.
"Darden strongly believes that Starboard's special meeting
is an unsatisfactory alternative to direct, ongoing engagement
between the Company and its shareholders," Darden said in a
regulatory filing on Wednesday.
"Darden strongly urges shareholders to communicate their
views directly to the company and consider carefully the risks,
costs and alternatives to a special meeting," the company said.
Darden said on March 5 that it had canceled its analyst and
investor meeting scheduled for March 28. The company said it
would instead meet individually with analysts and investors.
Starboard told investors that a special meeting would give
them a public forum to weigh in on the Red Lobster proposal and
said the deal could close before Darden's annual meeting, which
is usually in September.
"We believe it is critical for shareholders in this case to
have the right to review and approve any transaction involving
Red Lobster that takes place prior to the 2014 annual meeting,
at which time shareholders will have an opportunity to elect
directors whom they believe represent their best interests,"
Starboard said in a filing.
Neither the calling of the special meeting nor the approval
of a nonbinding resolution by shareholders at a special meeting
would prohibit Darden's directors from going ahead with a Red
Lobster deal, Starboard said.
Shares of Darden were down 0.5 percent at $49.23 in midday
(Reporting by Phil Wahba in New York and Lisa Baertlein in Los
Angeles; Editing by Lisa Von Ahn)