Seeking Alpha

Early reaction to Darden's Red Lobster sale

  • It's a see-saw early session for Darden Restaurants (DRI) following news the company will sell Red Lobster for $2.1B.
  • The company is taking the unusual measure of funneling the proceeds back to buybacks and debt retirement which is a tip-off to some that more dramatic changes are on the way.
  • The deal price seems a bit low to some restaurant industry analysts, although the sale comes amid sluggish traffic patterns at Red Lobster. There's also the difficulty of uncoupling the combined Red Lobster-Olive Garden units.
  • What to watch: Darden CEO Clarence Otis has been the target of activist investors and analysts for quite a while on accusations of mismanagement. If early reaction is any indication, Otis is still firmly on the hot seat.
  • DRI -1.3% premarket
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