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Activist Hedge Fund To Claw Back Its Breadsticks

download (1)New York (HedgeCo.Net) – One of the largest shareholders of Darden Restaurants, Starboard Value LP, has joined another activist investor, New York-based hedge fund Barington Capital Group LP, who said it is “evaluating all options” to provide a way “for shareholders to have their voices heard” on a plan to spin off Red Lobster.

Darden said on last week that it would sell or spin off its Red Lobster chain, which along with Olive Garden has been a drag on profits.

“While we are pleased that you recognize that Red Lobster could perform better with increased management focus, we do not believe the currently proposed plan to spin-off or sell Red Lobster, by itself, is in the best interest of shareholders.” The activist investors said in a letter to shareholders. “We believe the Company should more fully evaluate all available operational, financial, and strategic alternatives for Darden in order to create and execution a comprehensive plan to address all aspects of the business and to ensure the best possible outcome for all shareholders. This evaluation should include consultation with the Company’s financial advisers and discussions with shareholders such as Starboard.”

The hedge fund group goes on to say that the “Company (has an) extended record of disappointing operating performance, poor capital allocation,and missed expectations. Most notably, when adjusted for Darden’s extensive real estate ownership, the Company’s operating margins are well below peers.”

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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