Darden Sale of Red Lobster

After acquiring the company in 1995, Darden Restaurants sold Red Lobster for $2.1 billion in 2014 to San Francisco-based PE firm, Golden Gate Capital. Darden Restaurants NYSEDRI is a multi-brand restaurant operator with over 1800 locations, best known for owning Olive Garden. Darden sold Red Lobster at a 9x EBITDA multiple, after facing growing operational challenges. Some shareholders like Starboard LP viewed this as a hurried, reactive decision that could result in permanent destruction of shareholder value. Starboard Value LP, which owned 5.5 of Darden at the time, was seeking a special shareholder meeting for a vote on its proposal to halt Dardens Red Lobster separation. In order to finance the deal, Golden Gate sold off Red Lobsters real estate to another entity named American Realty Capital Properties now called Vereit and then immediately leased the restaurants back. Ten years later, in May 2024, Red Lobster filed for bankruptcy and closed several locations.