(Adds context, Darden comment)
March 19 (Reuters) - 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 restaurants.
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 trading. (Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles; Editing by Lisa Von Ahn)