Darden Restaurants urges shareholders to reject activist investor's calls for special meeting to weigh in on planned sale or spinoff of Red Lobster
Nevin Barich
ORLANDO, Florida
,
March 19, 2014
(Orlando Sentinel)
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Darden Restaurants is urging shareholders to reject an activist investor's calls for a special meeting to weigh in on a planned sale or spinoff of Red Lobster.
In a letter to stockholders, Darden said Starboard Value's campaign against Darden could ultimately cost the Orlando-based company millions of dollars.
It said a special meeting could discourage companies from bidding to buy Red Lobster and drive up the price because of concerns the sale wouldn't go through.
Starboard, which owns 5.5 percent of Darden stock, wants to halt the Red Lobster sale or spinoff. The New York hedge fund wants Darden to separate all its big brands, including Olive Garden and LongHorn Steakhouse, from five smaller niche ones.
Last month, Starboard began trying to arrange a special meeting, which Darden must hold if owners of at least half of its stock call for it.
Starboard wants the meeting so stockholders can vote on a nonbinding resolution urging Darden to hold off on its Red Lobster plans.
Darden is sending revocation cards to shareholders, allowing them to reverse their decisions if they have already voted for the special meeting. Shareholders can vote for the meeting by sending in cards supplied by Starboard.
Darden's top attorney Teresa Sebastian said in the letter, filed Tuesday with the U.S. Securities and Exchange Commission, that a meeting would "divert significant time and resources" from other priorities. Those include trying to turn around declining sales at Olive Garden.
A meeting "is an unsatisfactory alternative to direct, ongoing engagement between the Company and its shareholders," Sebastian wrote.
Starboard has said if shareholders agree to the meeting and resolution, it will seek reimbursement from Darden for its expenses.
Earlier this year, Starboard threatened it could try to oust board members at Darden's regularly scheduled annual meeting in September.
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