Jeffrey Smith, Starboard Value’s Investor Presentation On Darden Restaurants, Inc.(DRI); Argue Against Red Lobster Spin-off

Jeffrey Smith and Starboard Value are not fond of the decision of Darden Restaurants, Inc.(NYSE:DRI) management to proceed with the spin-off of one of its subsidiaries, despite protests from a number of important shareholders. In a recently amended filing with the Securities and Exchange Commission, Starboard Value has sent an investor presentation to the Chariman and Chief Executive Officer of Darden Restaurants, Clarence Otis, to reiterate their position against the spin-off. Smith and Starboard currently hold approximately 7.25 million shares, which accounts for 5.5% of the company’s common stock and makes them one of the largest shareholders.

Jeff Smith

Jeffrey Smith and Starboard Value had previously sent an open letter to express their disagreement with the firm’s plan to spin-off Red Lobster and call for a shareholder meeting to vote on the issue.

In their presentation, Smith and Starboard Value argue that the spin-off of Red Lobster would have a negative impact on the value of the company and the interests of its shareholders. They have also accused the management of incompetence and that the company has constantly disregarded the concerns of its shareholders. Smith and Starboard have also called for a special shareholder meeting to vote on this issue and have proposed a value creation plan. The full presentation can be found below:


Darden Restaurants, Inc. (NYSE:DRI) is an operator of restaurant services and, beside Red Lobster, manages restaurants like Olive Garden, LongHorn Steakhouse and other. The company has a market cap of $6.89 billion and pays an annual dividend of $2.15, which represents a yield of 4.10%. The stock is traded at a trailing Price to Earnings (P/E) ratio of 20.xx, close to the industry average of 23.10. Darden Restaurants announced revenues of $2.23 billion and earnings of $0.82 per share for the 13 weeks ending February 23, 2014. Analysts expect the company to register revenues of $2.34 billion and earnings per share of $0.94. The stock is touted mainly as a ‘Hold’.

Ken Griffin, the manager of Citadel Investment Group, is also betting big on Darden Restaurants, Inc. (NYSE:DRI), having massively increased his fund’s stake to 1.13 million shares valued at $61.6 million during the fourth quarter of 2013. Israel Englander is also keeping tabs, as his fund, Millennium Management, holds 1.33 million shares reportedly worth $72.5 million.

Disclosure: none.

Recommended reading:

Starboard Sends Another Letter To Shareholders of Darden Restaurants Inc. (DRI)

Jeff Smith Sends Letter to Darden Restaurants, Inc. (DRI)’s CEO; Asks to Delay Red Lobster Spin-off

Jeff Smith Initiates 5.6% Stake and Goes Activist on Darden Restaurants, Inc. (DRI)

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