Florida-based restaurant operator Darden Restaurants Inc. has bowed down to activist shareholder pressure. Darden on Thursday unveiled plans to spin off or sell its Red Lobster chain as quarterly profits tumbled by a worse-than-expected 42%.
According to Fox Business, the separation decision came two months after activist investor Barington Capital Group LP publicly pressed Darden to address its underperformance. It urged Darden to separate Red Lobster and Olive Garden from its higher-growth brands.
Barington Capital was however dissatisfied with Darden's announcement, calling it incomplete and inadequate. The New York hedge fund owns more than a 2% stake in Darden, the report said.
Darden said no final decision on the form of separation of Red Lobster has been announced. The company expects to execute a tax-free spin-off of Red Lobster to its shareholders, but it may also consider selling the brand, Fox Business said.
Darden has also confirmed that it has hired investment bank Goldman Sachs Group as financial adviser on the proposed separation, the report said.
Join the Conversation