Starboard Says Darden Is Once Again Confused And Wrong - Quick Facts

(RTTNews) - In a response to Darden Restaurants Inc.'s (DRI) latest Statements, Starboard Value LP said that the company is once again confused and wrong.

Jeffrey Smith, Managing Member, Chief Executive Officer and Chief Investment Officer of Starboard Value LP said that Darden continues to get many things wrong. It is, therefore, not surprising that they are also wrong about Starboard's priorities as it works hard to vastly improve Darden with the best interests of all shareholders in mind.

Starboard, which owns approximately 8.8% of the outstanding common stock of the Company, stated that it values Darden's attractive $2.20 annual dividend and investment grade rating. It believes that it can not only maintain the dividend and investment grade rating, but that it can also make the dividend safer, hopefully increase the dividend over time, and fortify the investment grade rating.

Starboard noted that it believes its plans for Darden will result in significant shareholder value creation, while also strengthening the dividend and investment grade rating. On the other hand, it believes the status quo Board and management represent a substantial risk, since it believes they are unable to produce the significant pre-tax and after tax cash flow advantages that it believes its plan will generate. It believes it is abundantly clear that a change in the Board provides all shareholders with the best opportunity to own a stronger and better performing company.

Smith said, "Further, we find management and the Board's arguments for why they needed to give away Red Lobster instead of listening to their shareholders highly concerning. We believe they basically said that they needed to give away Red Lobster because they didn't know how to improve their own restaurants. Since they were concerned that they couldn't improve Red Lobster, it was easier for them to just give it away. To that we would say, why should we trust them to turn around Olive Garden?"

Starboard said that it will be publishing a comprehensive transformation plan for Darden, in early September. This plan involves company-wide operational improvements and a turnaround of Olive Garden, along with strategic initiatives including a value enhancing strategy for Darden's real estate assets, a potential spin-off of the company's Specialty Restaurant Group (SRG), and a value-enhancing franchising strategy.