News Column

Hedge fund wants special meeting on Red Lobster spinoff

February 24, 2014

By Sandra Pedicini, Orlando Sentinel



Feb. 24--Hedge fund Starboard Value called Monday for a special meeting of Darden Restaurants shareholders over the company's plans to get rid of Red Lobster.

Starboard wants the meeting so stockholders can vote on a nonbinding resolution urging Orlando-based Darden to hold off on its Red Lobster plans. Starboard said it thinks shareholders should vote on any spinoff or sale of Red Lobster.

Starboard detailed its proposal in filings Monday with the U.S. Securities and Exchange Commission.

Starboard will send solicitation statements and request cards to stockholders. Under Florida law and company bylaws, Starboard said in an open letter to fellow investors Monday, shareholders can demand a special meeting if holders of at least half of the company's shares want it.

"This issue is far too important for the future value of Darden to be rushed through without shareholder support," Starboard said in an open letter to fellow investors Monday.

Just days after Darden said in December it would spin off or sell Red Lobster, Starboard revealed it had acquired 5.5 percent of the company's stock and started urging it to slow down those plans. Starboard wants Darden to first maximize the value of its restaurant real estate.

Starboard also is asking Darden to separate all its big brands, including Olive Garden and LongHorn Steakhouse, from the smaller ones.

Starboard wants a special meeting because it is likely the Red Lobster separation would be complete by Darden's annual shareholder gathering in September.

Darden said in an emailed statement Monday it is "confident" in the plan it has chosen.

"We look forward to talking further with Darden shareholders about our plans for addressing changing industry dynamics, leveraging the Company's position as the premier casual dining restaurant company, enhancing guest experiences and reinvigorating performance," the company's statement said.

Starboard last week hired former Olive Garden president Brad Blum. His perspective will be valuable, Starboard said in an open letter to shareholders, "particularly in light of the notable lack of meaningful restaurant operating experience among Darden's Board and senior management."

spedicini@tribune.com or 407-420-5240

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Source: Orlando Sentinel (FL)


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