More Cheddar: Red Lobster Sold For $2.1 Billion
Your cheddar bay biscuits have a new owner. On Friday (May 16) Darden announced that it will sell Red Lobster to Golden State Capitol investment firm for $2.1 billion, but will maintain its ownership of the Olive Garden.
The seafood chain has been struggling to keep up among less expensive, but similar quality food chains like Panera Bread and Chipotle. While the Olive Garden has introduced a new logo and more affordable and healthier menu items, in March Darden reported Red Lobster revenue at $611 million, an 8.7 percent drop from the year prior. Unloading the chain on Golden State will net Darden about $1 billion after taxes and paying off a billion in debt.
The acquisition is expected to be finalized next year, despite previous opposition from shareholders. However, their votes are needed in order to finalize the deal.
“By enabling us to bolster the Company’s financial foundation and increase our focus on the Olive Garden brand renaissance program, we believe this agreement addresses key issues that our shareholders have raised, including the need to preserve the Company’s dividend and regain momentum at Olive Garden,” Darden CEO Clarence Otis said in a statement.
Although Darden’s shares dropped about 3 percent during Friday (May 16) trading, Golden State Managing Director Josh Olshansky noted Red Lobster’s “exceptionally strong brand,” in a statement. “Red Lobster is exactly the type of company in which we seek to invest given its great brand profile and strong management team,” he said.
Golden State also has investment stakes in California Pizza Kitchen, Payless ShoeSource, and Eddie Bauer.