Darden Restaurants Inc. has just announced that it has entered into a definitive agreement to sell its Red Lobster business and certain other related assets and assumed liabilities to Golden Gate Capital for $2.1-billion in cash. The agreement is the culmination of a robust process to maximize the value potential of a sale or spin-off of Red Lobster and its real estate assets. As part of this process, the company and its advisors directly contacted a broad universe of potential financial and strategic buyers to purchase the Red Lobster business. In addition, a significant number of real estate buyers were also contacted to facilitate sale-leaseback financing for the purchase of the Red Lobster business. Darden explored numerous separation alternatives for Red Lobster and the value potential of each and concluded that the agreement with Golden Gate Capital is the superior value creating alternative. The separation of Red Lobster from Darden will better enable the management teams of each company to focus their exclusive attention on their distinct value creation opportunities. Golden Gate Capital has obtained committed debt financing, has fully executed a separate sale-leaseback agreement, and its offer is subject to customary closing conditions and regulatory approvals. Clarence Otis, Darden's Chairman, CEO, said, "Over the past months, we have had extensive conversations with our shareholders about Darden and the company's strategic direction. 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. At the same time, it provides Red Lobster and its dedicated employees and leadership team with a partner who has a strong track record in the industry and is as equally dedicated to Red Lobster's success.” Josh Olshansky, Managing Director at Golden Gate Capital added, "Red Lobster is exactly the type of company in which we seek to invest given its great brand profile and strong management team. We see significant opportunities for future growth by partnering with Kim Lopdrup and the management team to support the long-term success of Red Lobster." Darden expects the transaction to close in the first fiscal quarter of 2015. Currently there are over 700 Red Lobster restaurants worldwide. The deal is subject to customary closing conditions and regulatory approvals and is not subject to a shareholder approval condition or a financing condition. Golden Gate Capital has obtained committed debt financing from Deutsche Bank AG, Jefferies and GE Capital, and has fully executed a separate $1.5 billion sale-leaseback agreement with American Realty Capital Properties Inc., the proceeds of which will be used to support the financing of Golden Gate Capital's purchase of Red Lobster. Golden Gate Capital is a San Francisco-based private equity investment firm with over $12-billion of capital under management.
Darden Restaurants Inc. – 1000 Darden Center Dr., Orlando, Florida 32837 (407/245-4000 www.darden.com)
Golden Gate Capital – One Embarcadero Center, 39th Floor, San Francisco, California 94111 (415/983-2700 www.goldengatecap.com)