The parent company of Olive Garden, Longhorn Steakhouse and other fast casual dining chains delayed its annual shareholder meeting amid allegations it was giving different information out to different classes of investors regarding the sale of Red Lobster. Activist investor Starboard Capital isn’t happy with the move.
A lame duck CEO, a swift sale of Red Lobster without shareholder approval, and two hedge funds out for the entire board should make the Darden annual meeting in Orlando next month quite the spectacle. So. Much. Drama.
Darden Restaurants announced late Monday that CEO Clarence Otis will be stepping down after 10 years with the fast casual dining giant. His departure follows the company’s sale of Red Lobster to private equity firm Golden Gate Capital.
Darden says its sale last month of the seafood restaurant chain for $2.1 billion was full and fair. Activist investors say it was a scorched earth tactic meant to save the jobs of executives. A showdown is set for the company’s annual meeting later this year.
Barington Capital announced its support of a shareholder vote to kill the “fire sale” of Red Lobster to the private equity firm Golden Gate Capital. “Blatant disregard for shareholder interest.”
The claim comes in a new presentation by Starboard Value obtained by BuzzFeed and expected to be made public Tuesday morning.
The company said in an earnings call Friday morning that the quarter was “challenging,” especially at Red Lobster, which the company is trying to spin off. Darden’s CEO also urged shareholders to communicate with the company instead of holding a special vote on the spin-off or sale that an activist hedge fund has been fighting for in recent months.
Darden Restaurants reports earnings tomorrow, and another weak report could be enough to move shareholders to side with an activist hedge fund that is trying to stop the company from spinning off its chain of Red Lobster restaurants.
Starboard Value has gone on a hiring and purchasing spree to help with its battle to keep Olive Garden and Red Lobster under one corporate umbrella. How far will they go to keep the chains together?
Some of Wall Street’s top companies have come under fire from investors fed up with their current management and financial performance and agitating for change. Call it the golden age of the activist.