Put on your bibs: The fight over Red Lobster is getting messier.
An activist investor blasted a plan to spin off Red Lobster into its own, publicly traded company, saying the spinoff could cheat the parent company’s shareholders out of more than $800 million.
Starboard Value LP, which owns 5.5 percent of Red Lobster parent Darden Restaurants, charged that CEO Clarence Otis’ recent move to shuck Red Lobster is a “hurried, reactive attempt” to deflect shareholder pressure instead of fixing the struggling seafood chain.
“We believe that not only is the decision to separate Red Lobster at this time a mistake, but that it is irreversible and could lead to substantial destruction of shareholder value,” Starboard said in a Tuesday slide presentation.
Starboard has called for a special shareholder meeting to vote on the Red Lobster separation — a meeting that Darden recently warned shareholders is an “unsatisfactory alternative.”
Last week, Darden shareholder Barington Capital called for Otis’ head, dismissing the CEO as a numbers guy and urging the board to find a replacement with more restaurant expertise.
In its Tuesday slideshow, Starboard calculates that Darden’s real estate is worth at least $4 billion, and says spinning it off into a separate real-estate investment trust could create an addition $1 billion to $2 billion in shareholder value.
Darden pooh-poohed this analysis, saying in a brief response Tuesday that it is being advised by Goldman Sachs and Morgan Stanley, as well as Wachtell Lipton, the go-to New York law firm for fighting off activists.
Darden said it “again recently conducted an extensive assessment of alternatives for Darden’s real estate and determined that a real estate separation would not enhance long-term shareholder value.”
The company added that it “will review the latest Starboard materials and looks forward to addressing them.”
Darden — which also owns Olive Garden, Capital Grille and Bahama Breeze, among others — has insisted that all of its discussions with investors about the Red Lobster spinoff take place directly, instead of at meetings like the one Starboard is proposing.
Lately, some investors and analysts who have questioned Darden’s moves have privately complained they’ve been shut out by management and the board — a charge Darden denies.
Last week, Darden quietly beefed up restrictions for investors looking to unseat board members at the company’s annual meeting, requiring extensive new disclosures and procedures for nominating directors.