Starboard Wins Backing To Force Meeting On Red Lobster Spin-Off

Apr 23 2014 | 10:13am ET

Hedge fund Starboard Value may get its chance to block Darden Restaurants’ plan to spin off its Red Lobster chain.

The activist said it had won the backing of 54% of Darden shareholders to force a special meeting and a vote on the spin-off plan. Darden has said that the vote would not require a shareholder poll on the Red Lobster plan. What’s more, the company has 60 days to set a date for the meeting and another 60 to actually hold it, which could mean it will present investors with a fait accompli: Darden has said it wants to spin-off or sell Red Lobster early in its next fiscal year, which begins in just over a month.

Starboard has called Darden’s plan “ill-conceived and potentially value destructive.” Instead, the hedge fund wants Darden to split into three companies, with Red Lobster and the Olive Garden composing one, Darden’s faster-growing chains another and a real-estate investment trust the third.

Starboard has said it will seek the ouster of Darden’s board if the company moves forward with its plan without a vote.

“The Red Lobster separation doesn’t make a lot of sense,” Starboard’s Jeffrey Smith told CNBC. “Shareholders are voicing their opinions very strongly that they are not in favor. Research analysts have been against this separation.”

“You would think management and the board would have gotten the message long before now that change is required.”

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...