Starboard Value Goes Activist on Darden Restaurants (DRI) Too ~ market folly

Monday, December 23, 2013

Starboard Value Goes Activist on Darden Restaurants (DRI) Too

Another activist has joined the Darden Restaurants (DRI) fight.  Jeffrey Smith's Starboard Value LP has disclosed a 5.55% stake in DRI with 7,250,000 shares via an activist 13D filing.

Last week, we highlighted Barington Capital's presentation on Darden Restaurants (DRI) where they called for the company to split up.  The company responded by announcing plans to spin off its Red Lobster chain. Now another activist is on the scene.

This is a brand new investment for Starboard.  They've engaged management in discussions and feel the announced plan doesn't maximize shareholder value.  Smith's 13D says,

"Specifically, Starboard believes there is a significant opportunity to dramatically improve the operating performance at the Issuer, as well as opportunities to realize substantial value from the Issuer’s real estate holdings and to explore other strategic options available to the Issuer to maximize shareholder value, including alternative business sale or separation transactions."

The company operates restaurants such as Olive Garden, Red Lobster, LongHorn Steakhouse, The Capital Grille, Yard House, Bahama Breeze, Seasons 52, and Eddie V's Prime Seafood.

For more on Starboard, see Jeff Smith's presentation on Wausau Paper.

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