Darden to sell Red Lobster, hold onto Olive Garden

Published on NewsOK Modified: May 16, 2014 at 8:59 pm •  Published: May 16, 2014
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Still, affordability is an ongoing issue across the industry, and Darden has been slow to address it. At the height of the downturn, for instance, Applebee's introduced a 2-for-$20 deal that proved so popular it ended up becoming a menu fixture.

Activist investor Barington Capital had challenged Darden's plans to sell Red Lobster, saying the company should separate Olive Garden and Red Lobster as a pair from its other chains, which also include Bahama Breeze, Eddie V's and Yard House.

Barington said in a statement that Darden's decision was "unconscionable" given the concerns expressed by shareholders. Earlier this week, Starboard Value also condemned Darden for delaying a special meeting of shareholders on the plans.

Darden noted that its deal is not subject to shareholder approval.

After the transaction costs, Darden said it expects proceeds of $1.6 billion, of which $1 billion will be used to retire debt. The company said it expects the deal to close in its fiscal first quarter of 2015, which is this summer.

Golden Gate Capital made a separate $1.5 billion deal to sell Red Lobster's real estate to American Realty Capital Properties, then lease it back. Its other investments include California Pizza Kitchen, Payless ShoeSource and Eddie Bauer.

Shares of Darden Restaurants Inc. were down 4 percent at $48.49.

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