Darden's Red Lobster walks the plank
by Keith Nunes
SAN FRANCISCO — Golden Gate Capital, a private equity firm, has acquired the Red Lobster restaurant chain from Darden Restaurants, Inc., Orlando, Fla., for $2.1 billion in cash.
“Red Lobster is an exceptionally strong brand with an unparalleled market position in seafood casual dining,” said Josh Olshansky, managing director at Golden Gate Capital. “Red Lobster is exactly the type of company in which we seek to invest given its great brand profile and strong management team. We see significant opportunities for future growth by partnering with Kim Lopdrup and the management team to support the long-term success of Red Lobster.”
Golden Gate Capital is also owner of the California Pizza Kitchen chain. Darden also owns Longhorn Steakhouse and Capital Grille.
For Darden, the sale of Red Lobster brings to a close one aspect of the company’s efforts to conduct a strategic review to improve shareholder value. Initial plans by the company had included spinning off Red Lobster, but several shareholders balked at the idea.
“Over the past months, we have had extensive conversations with our shareholders about Darden and the company’s strategic direction,” said Clarence Otis, chairman and CEO of Darden. “By enabling us to bolster the company’s financial foundation and increase our focus on the Olive Garden brand renaissance program, we believe this agreement addresses key issues that our shareholders have raised, including the need to preserve the company’s dividend and regain momentum at Olive Garden.”