ORLANDO, FL
It’s into the boiling pot for Darden’s Board of Directors today as Starboard launches its next move against the restaurant operator. Starboard is now aiming to take complete control of the company following news of its recent sale of the Red Lobster chain. It’s a strange situation for both sides, however…and Darden’s response may surprise you.
Starboard has nominated 12 new members to replace the entirety of Darden’s Board of Directors, an unusual move for an activist investor since they tend to occupy only a few of the seats. Meanwhile, Darden says that it would actually consider the nominees at the 2014 Annual Meeting. It seems unusual that Darden wouldn’t put up a bigger fight especially since it sold Red Lobster without consulting shareholders first at the planned special meeting.
As of 1:51 PM ET on May 22, Darden’s stock went up $0.79 to $49.48, a 1.62% increase.
For more on Darden’s sale of Red Lobster, check out our previous story below.
Click here to read: Darden Restaurants Sells Red Lobster for 2 Billion Dollars
“The Board has violated a clear shareholder directive and disenfranchised shareholders,” said Starboard to Darden shareholders, according to The Wall Street Journal. “The announcement of the Red Lobster sale demonstrates that Darden’s current board does not regard upholding shareholder interests as a priority.”
In its statement released today, Darden responded, “By attempting to replace all 12 members of the Board with its own preferred nominees, Starboard is seeking effective control of the company – representation which is disproportionate to Starboard’s recently acquired approximate 6.2% stake in Darden and which does not offer Darden shareholders a control premium for such change in control.”
Although Darden remains confident in the ability and experience of its current Board and continues to allege that Starboard’s assertions are based on “incorrect and unrealistic analysis,” it might be some time before we see the value gained from Darden’s Red Lobster sale.
The question that’s still on my mind is if we’ll see further activism from other investors. It’s certainly possible, but for now, we’ll just have to wait and see.
