Starboard Value Files Complaint Against Darden Restaurants Inc. (DRI) in Florida Court; Demands Certain Books and Records

In a newly amended filing with the U.S. Securities and Exchange Commission, Starboard Value LP, managed by Jeffrey Smith, disclosed that it has filed a complaint in the Ninth Judicial Circuit Court of Florida against Darden Restaurants Inc. (NYSE:DRI). According to the filing, Starboard Value wants the company to provide certain books and records for purposes of inspection and copying under the Florida Business Corporations Act.

Darden Restaurants, Inc. (NYSE:DRI)

Currently, Starboard Value holds 10.56 million shares of Darden Restaurants Inc. (NYSE:DRI), equal to 8.0% of the company’s common stock outstanding. The stake represents an increase from 9.45 million shares the fund disclosed previously.

The filing with the SEC showed that Starboard filed its complaint against the company on July 23, 2014, seeking an order from the court to compel the company to provide Starboard with certain books and records for purposes of inspection and copying.

Starboard disclosed that it sent a letter to Darden Restaurants Inc. (NYSE:DRI) in June of this year to demand production of certain of the company’s books and records in order to gain additional insight and learn more as to the analyses, processes and rationale that ultimately led to the company’s agreement in May to sell Red Lobster at what Starboard believes to be a fire sale price to Golden Gate Capital.

“Since its announcement of the Red Lobster sale, Darden Restaurants Inc.’s (NYSE:DRI) stock price has declined by 11% and has underperformed its peers by 16%, representing the destruction of hundreds of millions of dollars in total shareholder value. In addition to better understanding the process and rationale behind the Red Lobster sale, Starboard served the June demand specifically to: investigate potential mismanagement, wrongdoing and/or corporate waste in connection with the proposed sale in the course of evaluating whether to bring an action to enjoin the sale or for breach of fiduciary duty against the company’s current board of directors and management; and assist Starboard in evaluating its proxy contest. These are appropriate purposes for making a books and records demand under Florida law,” Starboard said in the filing.

Recently, Starboard sent a letter to the board of directors of Darden Restaurants Inc. (NYSE:DRI) in which the fund underlined the need for a new direction and new leadership at the company.

Aside from Starboard, Israel Englander’s Millennium Management owns 905,740 shares, and Ken Griffin’s Citadel Investment Group disclosed ownership of 276,467 shares of Darden Restaurants Inc. (NYSE:DRI).

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