Barington
Group Announces Retention Of Advisors In Connection With Its Investment In
Darden Restaurants
Intends to Release Detailed
Plan to Improve Long-Term Shareholder Value
NEW YORK, Nov. 21, 2013
/PRNewswire/ -- A group of shareholders led by Barington Capital Group,
L.P. (the "Barington Group") that collectively owns over 2% of the
outstanding common stock of Darden Restaurants, Inc. ("Darden" or the
"Company") (NYSE:
DRI) today announced that it has retained
Houlihan Lokey to undertake an
independent review of Barington's recommendations to improve the long-term
financial performance of Darden. Once the review is completed, the
Barington Group will share its recommendations with Darden and its fellow
shareholders in a detailed presentation. MacKenzie Partners, a leading
proxy solicitation, investor relations and corporate governance consulting
firm, has also been retained to advise the Barington Group.
On
October 17th, Barington released
a copy of the letter it sent to Darden's Board of Directors that
summarized the recommendations Barington previously presented to Darden's
senior management team in June 2013 to
improve long-term shareholder value. The recommendations include measures
to:
-
improve operating execution at Darden, which
currently manages eight restaurant brands with diverse requirements and
has become, in Barington's view, too large and complex of an
organization to compete effectively with its more nimble competitors.
Barington recommends, as an initial step, that the Company form two
independently managed restaurant operating companies – one for Darden's
mature restaurant brands (Olive Garden and Red Lobster) and one for its
higher-growth restaurant brands (LongHorn Steakhouse, The Capital
Grille, Yard House,
Bahama Breeze, Seasons 52 and Eddie
V's Prime Seafood) – to enable each restaurant operating company to
benefit from a greater focus on the unique requirements of its brands;
-
enhance the long-term performance of
Darden's mature restaurant brands by, among other things, improving the
customer experience, ending future restaurant unit expansion and
capturing efficiencies in order to maximize return on capital and
sustain shareholder dividends;
-
improve the long-term competitiveness of
Darden's higher-growth restaurant brands by focusing on building
distinctive brands with a loyal customer base, experimenting with new
menu options and investing in new unit expansion, while simultaneously
evaluating potential brand divestiture or spin-off opportunities;
-
help "unlock" the value of Darden's
extensive real estate assets, which Barington believes represent a
source of significant value that is not adequately reflected in the
Company's current stock price; and
-
reduce operating expenses by
$100 - $150 million a year, which
Barington believes can be accomplished through, among other things,
streamlining operations, eliminating corporate functions that duplicate
brand-level work and improving the cost effectiveness of the Company's
advertising spend.
Barington believes
that if its recommendations are fully implemented, the price of Darden's
common stock could increase by up to 50% over recent trading levels.
James A. Mitarotonda, the Chairman and
Chief Executive Officer of Barington Capital Group, commented: "Darden has
a collection of eight wonderful restaurant brands and more real estate
assets than any other casual dining restaurant company in the United
States. Although Darden's 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. While we were encouraged by Darden's
recent announcement that it is taking steps to reduce expenses by
approximately $50 million a year – a helpful
start toward addressing the cost reductions we recommended – we believe
there is much more work that needs to be done and in a far more
expeditious timeframe. We have therefore engaged a financial advisor to
conduct an independent review of the strategic and operating improvements
we recommended, and we are committed to doing whatever we can to assist
the Company in improving long-term shareholder value for the benefit of
all Darden shareholders."
About Barington
Capital Group, L.P.
Barington Capital
Group, L.P. is an investment firm that, through its affiliates, manages a
value-oriented, activist investment fund that was established by
James A. Mitarotonda in January 2000.
The Fund invests in undervalued publicly traded companies that Barington
believes could appreciate significantly in value as a result of a change
in corporate strategy or from various operational, financial or corporate
governance improvements. Barington's investment team, senior advisors and
industry contacts are seasoned operating specialists, experienced in
working with companies to design and implement initiatives to improve
their financial and share price performance. Barington is a frequent
investor in branded consumer focused companies, with prior investments in
companies such as Lone Star Steakhouse, Dillard's, Warnaco, The Jones
Group, Lancaster Colony, Pep Boys,
Steven Madden and Nautica.
SOURCE Barington Capital Group, L.P.
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