Starboard Value Drops Red Lobster Vote

Jun 3 2014 | 2:34am ET

Hedge fund Starboard Value is abandoning what would have been a symbolic vote at Darden Restaurants to concentrate on one with teeth.

The activist had won enough support from shareholders to force a vote on Darden’s plan to sell or spin-off its Red Lobster chain. But the company announced last month that it planned to sell Red Lobster to private-equity firm Golden Gate Capital for $2.1 billion anyway, with plans to close the deal in August before the non-binding vote.

Starboard threatened a proxy fight to oust Darden’s entire 12-member board should it move forward with the Red Lobster sale. Yesterday, it withdrew its request for a special shareholder meeting and will instead focus on the board-control battle. The hedge fund said that the Golden Gate deal was “poorly structured, and clearly value destructive.”

Starboard owns a 5.5% stake in Darden and has pushed for a much more radical break-up plan.

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