Note: The copy of the article below is a revised
version the original that was
distributed to Forum participants shortly after its publication. The
revision includes a different calculation of stock price change in the
agree that Darden should slow the opening of new Olive Garden
The activist hedge fund
pushing for change at
Darden Restaurants signaled on Thursday that it was ramping up its
Barington Capital, which it
owns over 2 percent of the restaurant group’s shares,
announced that it has hired the investment bank Houlihan Lokey to
conduct “an independent review” of its recommended changes to the company’s
In perhaps a more
intriguing move, Barington said that it had also hired MacKenzie Partners, a
proxy soliciting firm often used in board fights.
The move comes a month
after the hedge fund publicly disclosed a letter that it had sent to
Darden’s board urging the company to break itself up into as many as three
separate businesses. The plan includes separating the mature Olive Garden
and Red Lobster chains from faster-growing brands like LongHorn Steakhouse
and the Capital Grille as part of an effort to cut over $100 million in
costs and simplify the restaurant group’s structure.
Barington says that its
initiatives could bolster the company’s stock price by up to 50 percent.
performance has been disappointing over the past few years, we are convinced
that the recommendations we shared with the company’s management team in
June can meaningfully enhance the long-term profitability of Darden,” James
A. Mitarotonda, Barington’s chairman and chief executive, said in a
statement on Thursday.
For now, relations between
Darden and Barington remain cordial, according to a person briefed on the
matter. The hedge fund — which prides itself on quietly and constructively
working with its targets — is hoping for a peaceful resolution. Mr.
Mitarotonda added in his statement that his firm is “committed to doing
whatever we can to assist the company in improving long-term shareholder
value for the benefit of all Darden shareholders.”
But investors and analysts
are likely to see the hiring of Houlihan and MacKenzie as a way to add
pressure on the company’s board to widen the scope of its own turnaround
It’s unclear whether
Barington has garnered significant support from the investment community.
While analysts broadly agree that Darden should tighten operations at its
core Red Lobster and Olive Garden restaurants, such as by slowing the
opening of new locations and cutting costs, some have expressed skepticism
that separating the brands would create value.
Still, shares in Darden
have risen over 16 percent since word of Barington’s efforts emerged. They
closed on Wednesday at $52.96.
This Forum program was open, free of charge,
to anyone concerned with investor interests in the
development of marketplace standards for expanded access to
information for securities valuation and shareholder voting
decisions. As stated
in the posted
Conditions of Participation, the purpose of this public
Forum's program was to provide decision-makers with access to
information and a free exchange of views on the issues
presented in the program's Forum
participant was expected to make independent use of
information obtained through the Forum, subject to the
privacy rights of other participants. It is a Forum
rule that participants will not be identified or quoted
without their explicit permission.
This Forum program was initiated in 2012 in
collaboration with The Conference Board and with
Thomson Reuters support of communication technologies to address
issues and objectives defined by participants in the 2010 "E-Meetings"
program relevant to broad public interests in marketplace
practices. The website is being maintained to provide
continuing reports of the issues addressed in the program,
as summarized in the
January 5, 2015 Forum Report of Conclusions.
The information provided to
Forum participants is intended for their private reference,
and permission has not been granted for the republishing of
any copyrighted material. The material presented on this web
site is the responsibility of
Gary Lutin, as chairman of the Shareholder Forum.
is a trademark owned by The Shareholder Forum, Inc., for the
programs conducted since 1999 to support investor access to
decision-making information. It should be noted that we have
no responsibility for the services that Broadridge Financial
Solutions, Inc., introduced for review in the Forum's
2010 "E-Meetings" program and has since been offering
with the “Shareholder Forum” name, and we have asked
Broadridge to use a different name that does not suggest our
support or endorsement.