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Darden Restaurants to feel more pressure as Starboard buys stake

  • Activist investor Starboard Value has reportedly bought a 5.6% holding in Darden Restaurants (DRI) just days after the latter said it intends to spin off its Red Lobster operations following pressure to restructure from another shareholder, Barington Capital Group.
  • However, Darden's plan is not enough for Starboard, which wants the restaurant operator to create a real estate investment trust (REIT) for its property holdings, and combine its Red Lobster, Olive Garden and LongHorn Steakhouse chains into one company, and its faster-growing businesses into another.
  • Starboard hasn't been in contact with Barington, whose wish list is similar but not identical to Starboard's, although it has spoken with other disgruntled shareholders.
Comments (1)
  • ARG1
    , contributor
    Comments (518) | Send Message
     
    As a shareholder I wanted to express my concerns over the executive leadership of Darden Restaurants. I feel the restaurants main issue is the management team and Clarence Otis. Recently on CNBC Clarence Otis was named the worst CEO of 2013. Clarence Otis was totally complacent during the changes going on in the restaurant business and you can't be complacent in any business whether you are GM making cars or Kodak in photography.The big problem with Clarence Otis is that he has no business running a restaurant business! He is a lawyer by training and
    lawyering skill sets have no place in the restaurant business! Let me
    give you an example of what I mean. Gregory Wesson is the CEO of
    Walgreens. His education is in pharmacy and was a Walgreens'
    pharmacist, successfully managed a Walgreens store and moved through the ranks of Walgreens to becomes CEO and WAG stock price is at all time highs! The CEO should be a person with a background in food selection, menus, figuring out what customers like to eat and the ambiance of how people like to eat. They have to have training by actually having worked in a restaurant, familiar with kitchens, chiefs and culinary arts. Just like Greg Wesson's heart was in the pharmacy business and loved it, you need somebody who loves cooking, chiefs, menus and working with the dining public, all the things necessary to run a successful restaurant business. GM just picked a CEO who loves autos. MSFT is looking for someone for CEO who love technology and innovation. Darden needs someone to run the business who has the restaurant business in their blood and loves it. Clarence Otis would never be picked to run WAG, GM or MSFT because he is best at lawyering
    and his JD law school background has skill sets for lawyering but not restaurants! As a shareholder I am disappointed about the way Clarence Otis managed the business. I hope the BOD finds somebody who knows how to run a restaurant business, worked in the kitchens, worked with chiefs and knows culinary arts, and loves restaurant business.
    29 Dec 2013, 09:36 PM Reply Like
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