Darden sells Red Lobster for USD 2.1b

Darden Restaurants said it agreed to sell its struggling Red Lobster seafood chain to Golden Gate Capital for USD 2.1 billion (EUR 1.53 billion) in cash.

The company said it expects net cash proceeds of about USD 1.6 billion (EUR 1.17 billion), of which about USD 1 billion (EUR 730 million) would be used to retire debt.

The remainder would be used to buy back up to USD 700 million (EUR 511 million) of shares in fiscal 2015, the company said.

“Over the past months, we have had extensive conversations with our shareholders about Darden and the Company's strategic direction.  By enabling us to bolster the Company's financial foundation and increase our focus on the Olive Garden brand renaissance program, we believe this agreement addresses key issues that our shareholders have raised, including the need to preserve the Company's dividend and regain momentum at Olive Garden,” said Clarence Otis, Darden chairman and CEO. “At the same time, it provides Red Lobster and its dedicated employees and leadership team with a partner who has a strong track record in the industry and is as equally dedicated to Red Lobster's success.  Our Board and management team are highly focused on enhancing shareholder value, and we believe this transaction is consistent with the efforts underway to deliver on this responsibility.”

“Red Lobster is an exceptionally strong brand with an unparalleled market position in seafood casual dining,” said Josh Olshansky, Managing Director at Golden Gate Capital. “Red Lobster is exactly the type of company in which we seek to invest given its great brand profile and strong management team. We see significant opportunities for future growth by partnering with Kim Lopdrup and the management team to support the long-term success of Red Lobster.”