Barington Asks Darden To Replace CEO, Reconsider Reb Lobster Spin-off - Update

(RTTNews) - Barington Capital Group L.P. on Wednesday urged independent directors of Darden Restaurants Inc (DRI) to replace Chairman and Chief Executive Officer Clarence Otis, while objecting to spin-off plans for the Red Lobster chain.

An investment firm, Barington represents a group of shareholders of Darden.

In a missive to the independent directors, Barington opined that Darden stock is undervalued and that Clarence Otis needs to do more to steer the company's eight brands and real estate holdings.

Otis has conflict of interest and Darden will be best served under someone with unbiased reputation, Barington said.

Barington believes Darden's performance has tumbled under Otis, and agreed with Starboard Value, which has a 5.5 percent stake in Darden, to obtain shareholders nod before spinning off Red Lobster.

Red Lobster's real estate presents opportunities to unlock the value of the assets, including through the formation of a publicly traded real estate investment trust, Barington said.

Barington also asked the independent directors to explore comprehensive restructuring alternatives that include the separation of Olive Garden brand.

In December, Darden said it was looking to sell or spin-off its struggling Red Lobster chain. But Starboard objected to the proposal and urged Darden to delay the separation and seek comprehensive alternatives.

Last Friday, Darden, based in Orlando, Florida, reported a lower third-quarter profit, as sales dropped, due partly to harsh weather. Darden affirmed its earnings outlook for fiscal 2014 to decline between 15 percent and 20 percent.

Darden stock is trading at $50.90, up $0.19 or 0.37%, on a volume of 326k shares on the NYSE.