2.8% shareholder Barington Capital escalates its activist posture towards Darden Restaurants (DRI +1.3%), issuing an 84-page presentation stating its belief that Darden's "corporate centralization and resulting internal complexity have contributed to the Company's declining financial performance and eroding competitive position."
Barington believes $71-$80/share in value could be unlocked if the company is split into "Darden-Mature" (Olive Garden and Red Lobster) and "Darden Higher-Growth" (Bahama Breeze, Longhorne Steakhouse, Seasons 32, Eddie V's, Yard House, and The Capital Grille) and the real estate assets, which Barington believes are valued at $4B, are divested. The respective companies would then be run more in-line with value and growth companies respectively, Barington recommends. The points have been a general theme of Barington's agitation in the past several months.
And although Barington is encouraged by Darden's proposed $50M in cost cutting efforts, the fund thinks the restaurateur "has numerous actionable avenues to lower operating expenses by up to $100M-$150M."
Barington has hired a proxy solicitation firm and Houlihan Lokey to review its recommendations in a sign that the fund may be willing to go to bat to push through its recommendations.