April 22 (Bloomberg) -- Starboard Value LP asked Darden Restaurants Inc. to hold a special shareholder meeting where the fund will present a resolution asking the company not to spin off or sell Red Lobster before its annual meeting, unless investors approve a deal.
Holders of more than 55 percent of the restaurant chain’s stock asked for the meeting in a letter the New York-based fund delivered to Darden, Starboard said in a statement today.
“We have chosen to deliver the consents to Darden now in order to ensure that the special meeting is held as soon as possible and that Darden receives the strong and clear message that shareholders want a say on any transaction to separate Red Lobster,” Starboard Chief Executive Officer Jeff Smith said in the statement.
Darden’s plan to spin off Red Lobster is “just a bad idea” that would create an underperforming stock and deprive the parent company of almost half of its real estate, Smith said earlier today at the Active-Passive Investor Summit in New York. He reiterated Starboard’s proposal that Darden instead slash operating costs and unlock value in its real estate via a sale or real-estate investment trust transaction.
Darden will address Starboard’s request for a special meeting “as appropriate,” it said in a separate statement.
“Shareholders have told us that while they may support the calling of a special meeting, they have not decided on how they will vote at the meeting itself,” Darden said.
The restaurant chain said it will continue discussions with shareholders and reiterated that its pursuit of a separation of Red Lobster through a sale or spinoff is in the best interest of investors.
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