Darden Restaurants Plans To Separate Red Lobster Business - Quick Facts

(RTTNews) - Darden Restaurants, Inc. (DRI) Thursday announced that it is planning to separate Red Lobster Business, as part of a comprehensive plan approved by Board of Directors to enhance shareholder value. The plan also includes reducing new unit growth, suspending acquisitions, increasing operating support cost savings, and refining senior management compensation and incentive programs

The company noted that although no final decision has been made on the form of the separation, it expects to execute a tax-free spin-off of Red Lobster to its shareholders, but may also consider a sale of the Red Lobster business.

Kim Lopdrup, currently Darden's President, Specialty Restaurant Group and New Business, has been selected to serve as Chief Executive Officer of Red Lobster following the separation.

Darden added that the reduction in new unit expansion will come primarily from suspending new unit growth at Olive Garden and more limited new unit growth at LongHorn Steakhouse, with new unit growth at the Specialty Restaurant Group continuing at a pace modestly below this year's level.

The reduced unit growth is projected to lower capital spending by at least $100 million annually.

Through aggressive operating support cost management, the company now expects the earlier announced cost reduction efforts to result in savings of at least $60 million annually beginning in its fiscal year 2015. This represents a $10 million increase over the $50 million previously projected.

The company also said that on a combined basis, Darden and Red Lobster will maintain Darden's current quarterly dividend of $0.55 per share following the separation.