Feb 24 Activist hedge fund Starboard Value LP
wants to put to shareholder vote Darden Restaurants Inc's
plan to spin off its Red Lobster chain, the Wall Street
Journal reported, citing a letter Starboard plans to send to
shareholders on Monday.
In December, Darden said it would spin off or sell the
floundering Red Lobster chain, bowing to pressure from hedge
fund Barington Capital Group that said the largest U.S.
full-service restaurant operator has become too large and
complex to compete with direct rivals.
Starboard Value, which owns a 5.5 percent stake in the
company, has been urging Darden to delay plans to spin off of
its struggling Red Lobster chain.
Starboard, must win the support of more than 50 percent of
the shareholders in the next 60 days to hold the special
meeting, the Journal said. ()
If the special meeting happens, Starboard would ask
shareholders to vote on a non-binding proposal urging Darden not
to approve any Red Lobster plan without a shareholder vote, the
Starboard decided to call for the special meeting in what is
known as a "consent solicitation", which activist investors have
used in recent years to attempt to replace board members and
push corporate change, the newspaper said.
In his letter to Darden last month, Starboard Value Managing
Member Jeffrey Smith called Darden's Red Lobster proposal "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.
Starboard and Darden could not be immediately reached for
comment by Reuters outside of regular business hours.