The activist hedge fund pushing for change at Darden Restaurants has already said that it isn’t happy with the company’s plans to spin off its Red Lobster chain.
Now the firm is giving explaining why it’s still dissatisfied.
The hedge fund, Barington Capital Group, said on Monday that Darden’s plan to bolster its stock price â€" including shedding Red Lobster â€" doesn’t go far enough in breaking itself apart.
“Darden’s proposed plan appears to use to be more of an attempt to do the minimum necessary to maintain the status quo than an effort to formulate a truly comprehensive strategy to improve long-term shareholder value,†Barington said in its statement.
Barington isn’t the only investor unhappy with Darden’s plans. Last month, the investment firm Starboard Value disclosed owning 5.6 percent of the restaurant operator and said that the company’s plan fell “significantly short of the actions required to maximize shareholder value.
Barington, which has been calling for a more substantial breakup of Darden for months, has long believed that the restaurant operator’s real estate should be sold or spun off to raise more money for shareholders.
Barington said that it was worried Darden’s plan to spin off or sell Red Lobster would include the chain’s land holdings in any transaction, depriving shareholders of additional returns.
“We would strongly object to any transaction that limits the ability to realize the significant value of the company’s real estate assets for the benefit of all Darden shareholders,†it said.
The activist investor also said that it still believed in spinning off more than just Red Lobster. It has long advocated a plan that would divided the restaurant company’s mature brands, namely Red Lobster and Olive Garden, from its younger and faster-growing chains.
Divesting just the seafood chain would leave the company still running seven other restaurants, which Barington deemed too complex.
It’s not clear that Darden will change its mind. The company and its advisers have already concluded that not all of the activist’s proposals made sense, a person briefed on the matter said last month.
Barington said that it planned to make an online presentation on June 30.
