Barington Capital Asks Darden To Consider Beginning Search For New CEO

(RTTNews) - Barington Capital Group L.P. asked the independent directors of Darden Restaurants Inc. (DRI) to consider beginning a search for a new Chief Executive officer with stronger restaurant operating experience.

In a letter to the independent directors of Darden Restaurants, Barington said it believed that the company's common stock is significantly undervalued and would be worth substantially more if Clarence Otis, the Company's Chairman and Chief Executive Officer, were a more effective steward of Darden's eight brands and extensive real estate holdings.

Barington said it is deeply concerned by the rapidly deteriorating financial performance of Darden under the leadership of Otis. In addition, it is dismayed by his efforts to separate Red Lobster and its valuable real estate from the Company without shareholder approval, notwithstanding the fact that this controversial transaction could potentially diminish shareholder value and appears to us to be self-serving.

Barington believed that Otis should no longer serve as Chairman of the Board. It recommended that a new independent chairman be immediately appointed in order to ensure that Board decisions are unbiased and made in the best interests of the owners of the Company.

Barington expressed its strong support for starboard value's efforts to provide shareholders with the right to vote on the Red lobster separation.

Barington believed that the Darden Board should obtain the approval of shareholders before proceeding with the controversial separation of Red Lobster. It questioned why the independent directors haven't caused the board to provide shareholders with the right to express their views on such an important transaction.

Barington strongly recommend that the Company reconsider its views regarding Red Lobster's real estate, as it believe that Darden should retain these valuable assets rather than include them as part of any sale or spin-off.

Barington stated that retaining Red Lobster's real estate would preserve the opportunity to pursue a variety of other opportunities to unlock the value of these assets in the future, including through the formation of a publicly traded real estate investment trust (REIT). It would also allow the Company to collect rent from Red Lobster, which we believe is a superior alternative to including the real estate in the separation.

Barington also asked the independent directors of the company to independently explore more comprehensive restructuring alternatives that include the separation of Olive Garden and the formation of a publicly traded REIT. It also recommend that the independent directors permit the Company's financial advisors to engage in discussions with private and public real estate investment companies.