Early reaction to Darden's Red Lobster sale

|About: Darden Restaurants, Inc. (DRI)|By:, SA News Editor

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