Second Activist Attacks Darden

A second hedge fund is taking aim at Darden Restaurants, calling its plan to spin off only its Red Lobster chain insufficient.

Darden, which owns eight restaurant chains, said last month that it would separate Red Lobster, one of its underperforming businesses. The move followed pressure from Barington Capital Group, which has called for a spin-off of both Red Lobster and the Olive Garden, as well as a spin-off of its real-estate holdings.

Now, Darden is also facing off against Starboard Value, which has taken a 5.6% stake in the company—twice as large as that held by Barington. And Starboard is not impressed with the spin-off plans.

“Starboard believes that the plan outlined by management falls significantly short of the actions required to maximize shareholder value,” Starboard’s Jeffrey Smith wrote in a Securities and Exchange Commission filing before Christmas.

Darden said that it hasn’t “even been contacted by Starboard.”