(Reuters) - Del Frisco's Restaurant Group Inc DFRG.O is under pressure from an activist shareholder to launch a quick turnaround of the company's performance or seek to sell the steak house chain, according to people familiar with the matter.
Engine Capital, which owns 1.25 percent of the company, told top company executives this month that Del Frisco’s needs to immediately improve its operations and cash management or seek a buyer, people familiar with the matter said.
Ancora Advisors, which owns 0.84 percent of Del Frisco’s, also wants the company to pursue a sale, the sources said.
Engine Capital and Ancora Advisors declined to comment. A spokesman for Del Frisco’s declined to comment.
Del Frisco’s stock closed 2.8 percent higher on Tuesday at $16.60.
On Monday, Del Frisco’s said CEO Mark Mednansky would retire and be replaced by board member Norman Abdallah.
The Southlake, Texas-based company, which owns Del Frisco’s Grille and Sullivan’s Steakhouse, has a market value of around $400 million.
Its largest shareholder is Fidelity National Financial FNF.N, Inc., which owns 13 percent of the company, and counts activist hedge fund Corvex Management as one of its top holders.
Fidelity National Financial is a title insurer that diversified into the restaurant business when it agreed to buy O’Charley’s Inc. in 2012. At the time, O’Charley’s operated more than 340 O’Charley’s, Ninety Nine and Stoney River restaurants.
Last year, Engine Capital, together with fellow activist JCP Investment Management, targeted fuel and convenience store retailer CST Brands Inc. to seek a sale. Alimentation Couche-Tard Inc. agreed to buy CST for nearly $4 billion in August.
Reporting by Michael Flaherty; Editing by Alan Crosby
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