Feb 24 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
"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
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
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
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.