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Omaha Steve

(98,872 posts)
Fri Oct 10, 2014, 10:22 AM Oct 2014

Activist investor wins control of Darden's board

Source: AP-EXCITE

By CANDICE CHOI

NEW YORK (AP) — An activist investor has won all 12 seats on the board of Olive Garden's parent company Darden Restaurants, according to preliminary results announced by the company.

Starboard Value was seeking to replace the entire board with its own nominees at the company's annual meeting Friday. The hedge fund has criticized Darden's management of Olive Garden, as well as how the company handled the sale of Red Lobster.

Both Olive Garden and Red Lobster suffered declining sales in recent years, and Darden's management has acknowledged the need for changes. The company has been trying to update the menu and marketing for Olive Garden and noted there have been signs of improvement, including a slight bump in sales for September.

At the meeting in Florida, Starboard CEO Jeff Smith stood to introduce himself and the new board members before voting results had been announced. Smith noted Starboard has already begun "to work with the management team to ensure a seamless transition."

FULL story at link.


Read more: http://apnews.excite.com/article/20141010/us--darden-board_control-822da23c90.html

18 replies = new reply since forum marked as read
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Activist investor wins control of Darden's board (Original Post) Omaha Steve Oct 2014 OP
I already don't eat at Olive Garden but if this new guy wants a new reason for us to never go back.. LynneSin Oct 2014 #1
"spin off the real-estate holdings" would gut the company. For a short term boost of cash they'd be Erose999 Oct 2014 #8
Um, no. They're a restaurant chain, not a real estate company. Dreamer Tatum Oct 2014 #9
They own the real estate their restaurants are preched on though, and its quite a bit of valuable Erose999 Oct 2014 #11
What would be the point of owning the land and the buildings? Dreamer Tatum Oct 2014 #12
What would be the point of owning a home as opposed to renting a home? It works the same way in the Erose999 Oct 2014 #13
To live there? They sell food there. Dreamer Tatum Oct 2014 #14
Been boycotting them since cprise Oct 2014 #16
wow when I saw "activist" in the title I thought someone littlewolf Oct 2014 #2
Activist investor is a polite way if saying corporate raider. Lucky Luciano Oct 2014 #4
Mitt Romney nt Scruffy Rumbler Oct 2014 #5
It used to mean someone advancing a principle cprise Oct 2014 #17
Maybe you should read the Starboard document. Dreamer Tatum Oct 2014 #10
Do you have a link to it? jmowreader Oct 2014 #18
Buzzfeed has been following the Darden saga fairly well. gvstn Oct 2014 #3
Hope and change, corporate style Demeter Oct 2014 #6
You can just about put a timetable on this matt819 Oct 2014 #7
Reduce costs by hurting the workers. Yeah, sounds just like the type of place I want to do business blkmusclmachine Oct 2014 #15

LynneSin

(95,337 posts)
1. I already don't eat at Olive Garden but if this new guy wants a new reason for us to never go back..
Fri Oct 10, 2014, 10:41 AM
Oct 2014
It's not clear what changes Starboard will push for right away, but the hedge fund had said in a 294-page presentation last month that Darden should spin off its real estate holdings. It also noted Darden could cut costs with changes like outsourcing the production of its soup base and reducing its ranks of full-time workers.


So basically it wants to use cheaper quality soup bases and make sure their employees really can't earn a living working at their company.

Seriously just shut down the company now because already Olive Garden is like the worst chain restaurant out there and this new guy wants to do everything possible to make it even worse!

Erose999

(5,624 posts)
8. "spin off the real-estate holdings" would gut the company. For a short term boost of cash they'd be
Fri Oct 10, 2014, 01:34 PM
Oct 2014

renting property that they formerly owned. This is the kind of fuckery Bain Capital is known for. I'm sure they'll cut benefits, cut full timers, layoffs, etc as well. They'll squeeze every penny out of OG they can turn into profit until they've ran it into the ground, and then sell off the assets.

Dreamer Tatum

(10,926 posts)
9. Um, no. They're a restaurant chain, not a real estate company.
Fri Oct 10, 2014, 02:51 PM
Oct 2014

You should read the document. It is illuminating.

Erose999

(5,624 posts)
11. They own the real estate their restaurants are preched on though, and its quite a bit of valuable
Fri Oct 10, 2014, 03:07 PM
Oct 2014

property. Spinning off the real estate would mean forming a holding company that owns the real estate and then selling that off. They'd be renting instead of owning.

I've read the document, and it's "illuminating" that shareholders in the company are acknowledging things that casual observers have been saying for years. It seems like the document is part of a ploy for these corporate raiders to drive down share price and buy out the majority shareholders cheap. Which they did. Now they can start cutting corners and selling off assets to make a quick buck.

Dreamer Tatum

(10,926 posts)
12. What would be the point of owning the land and the buildings?
Fri Oct 10, 2014, 03:16 PM
Oct 2014

I don't see it.

I don't think you read the document at all. It is all about returning shareholder value by making the
place decent to eat at again. Right now it stinks (literally) and they've completely lost their way.

I don't see how you can call Starboard "raiders" when they're specifically critiqued raider-like behavior of current
management and have identified new management with records of returning value. Moreover, the company has
layers and layers of worthless middle management. Getting rid of them enhances value and allow them to
invest in the people on the front lines. It's all in the document.

Erose999

(5,624 posts)
13. What would be the point of owning a home as opposed to renting a home? It works the same way in the
Fri Oct 10, 2014, 03:22 PM
Oct 2014

restaurant business.

Dreamer Tatum

(10,926 posts)
14. To live there? They sell food there.
Fri Oct 10, 2014, 03:25 PM
Oct 2014

Their ability to obtain capital, for instance, is based on their balance sheet. Commercial real estate
crashed, of course, which had a material effect on the value of their holdings, which certainly
affected cost of funds. There are also insurance and tax matters to worry over, and in fact that
is part of the bloat of the company. If they had just a couple of properties, I could see it, but a national
portfolio? Not so sure.

cprise

(8,445 posts)
16. Been boycotting them since
Fri Oct 10, 2014, 04:42 PM
Oct 2014

...they announced their intentions to undermine Obamacare by changing work hours and such.

littlewolf

(3,813 posts)
2. wow when I saw "activist" in the title I thought someone
Fri Oct 10, 2014, 10:47 AM
Oct 2014

was actually make things better. you know like paying people enough
and using better ingredients. Silly me.

Lucky Luciano

(11,237 posts)
4. Activist investor is a polite way if saying corporate raider.
Fri Oct 10, 2014, 11:01 AM
Oct 2014

Examples:

Carl Icahn
Daniel Loeb
Nelson Peltz

Gordon Gekko.

cprise

(8,445 posts)
17. It used to mean someone advancing a principle
Fri Oct 10, 2014, 04:45 PM
Oct 2014

beyond merely sticking up for shareholder financial interests.

gvstn

(2,805 posts)
3. Buzzfeed has been following the Darden saga fairly well.
Fri Oct 10, 2014, 10:59 AM
Oct 2014

They haven't gotten to this most recent development yet, but seem invested in this story and some of their earlier posts might give some background for those interested. Most are more informative than average Buzzfeed articles.

http://www.buzzfeed.com/search?q=darden

matt819

(10,749 posts)
7. You can just about put a timetable on this
Fri Oct 10, 2014, 12:23 PM
Oct 2014

Employees will be fired. Lots of financial manipulation to benefit Starboard exclusively. Sale of Darden real estate. Quality will suffer (even more). Employees and management will be squeezed dry. Give it maybe 3 years and Darden restaurants will be shut down, leaving empty shells across the US.

Capitalism. Ain't it wonderful?

 

blkmusclmachine

(16,149 posts)
15. Reduce costs by hurting the workers. Yeah, sounds just like the type of place I want to do business
Fri Oct 10, 2014, 04:21 PM
Oct 2014

with.

NOT!


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