Darden Steadfast in Opposition to Special Red Lobster Meeting
There continues to be plenty of advice being offered to owners of Orlando, Florida, USA-headquartered Darden Restaurants stock these days, as the company remains steadfast in it intention to spin off the Red Lobster division. While some investor groups are advising shareholders to call for a special meeting to discuss the fate of the USA’s largest seafood restaurant chain, at least one. Egan-Jones, has reportedly recommended against having a meeting.
Starboard Value, a New York hedge fund keen on blocking Darden's Red Lobster sale plans, has been trying to build momentum for a special meeting of stockholders to cast a nonbinding vote. If owners of more than half of the company’s shares call for such action by the board, Darden must honor the request. Thus far the executive management team has argued that such a meeting is not only unnecessary and costly, but it could negatively impact anticipated bids for Red Lobster.
Meanwhile, Glass, Lewis & Co. has issued a report claiming that Darden has "fallen short of justifying that it should be given complete deference." It cited "widespread concern and skepticism among Darden's shareholder base."
Darden replied to the statement on April 11, in part, as follows:
“The Glass Lewis report does not give appropriate consideration to the facts, including Darden’s actual operating and financial performance and value creation initiatives, and the assertions regarding Darden's record of engagement are demonstrably false. Further, the conclusions reach far beyond the question of whether to call a special meeting, which is currently the only matter before Darden shareholders. We are disappointed that Glass Lewis issued this report without meeting any members of Darden's board of directors or management team.”
The statement continued: “All of us at Darden are focused on improving performance and enhancing shareholder value, and we believe the actions we are taking best position the company to achieve these objectives.”
Darden Restaurants, Inc., ranked as the world's largest full-service restaurant company, owns and operates more than 2,100 outlets that generate over $8.5 billion in annual sales. It employs more than 200,000 people at Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House restaurants.
Darden reported recently that sales at established restaurants slipped 8.8% at Red Lobster and 5.4% at Olive Garden in the third quarter ending on February 23. Red Lobster recoded double-digit percentage declines in customer visits in each month of the latest quarter, and logged nine consecutive months of slowing traffic. Darden's last quarterly net income was down fell by 18% to $109.7 million.