Darden Completes Sale Of Red Lobster To Golden Gate Capital



Darden Completes Sale Of Red Lobster To Golden Gate Capital

Darden Positioned to Improve Operations, Reduce Costs and Focus on Value-Creating Opportunities

Darden Restaurants, Inc. (NYSE: DRI) and Golden Gate Capital today announced that Golden Gate has completed the acquisition of the Red Lobster business and certain other related assets and assumed liabilities for approximately $2.1 billion in cash.

The sale of Red Lobster is the culmination of a robust competitive process that enabled Darden to maximize the value of Red Lobster, eliminate the risks and volatility associated with continuing to own the business, and provide a realistic market-validated valuation of Darden’s real estate assets.  The sale is also consistent with Darden’s strategy of increasing its focus on its Olive Garden brand renaissance program and preserving its dividend.

As previously announced, approximately $1.0 billion of the net cash proceeds are expected to be used to retire outstanding debt.  The remaining net proceeds of approximately $500 million to $600 million are expected to be deployed for a new share repurchase program of up to $700 million in fiscal 2015.  In addition to strengthening Darden’s credit profile, with the lower debt levels and reduced outstanding share count, Darden expects to maintain its current quarterly dividend of $0.55 per share, or $2.20 annually.

Clarence Otis, Darden’s Chairman and CEO, said, “We are pleased to have completed the sale of Red Lobster as planned.  The completion of this transaction marks an important milestone in the actions we are taking to improve our operations, reduce costs, and focus on opportunities with the highest value-creating potential.  While we still have work to do, we are making progress in our efforts to enhance performance and shareholder value.”

“We are excited to have successfully completed the acquisition of Red Lobster, officially beginning our partnership with this iconic brand as it enters into this exciting new chapter of growth,” said Josh Olshansky, Managing Director at Golden Gate Capital.  “We strongly support CEO Kim Lopdrup’s vision to deliver Great Seafood, Great People and Great Results. We look forward to leveraging the Company’s unparalleled brand awareness to expand its leadership position in casual dining, and driving long-term success by delighting millions of loyal customers.”

Goldman, Sachs & Co. served as Darden’s exclusive financial advisor on the sale of Red Lobster and also as financial advisor to Darden’s Board of Directors.  Latham & Watkins served as legal counsel to Darden on the transaction.  Morgan Stanley is serving as financial advisor working exclusively at the direction of Darden’s Board of Directors, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Darden’s Board of Directors.

Deutsche Bank Securities Inc. and Jefferies LLC served as financial advisors to Golden Gate Capital in connection with the transaction.  Deutsche Bank Securities Inc., GE Capital, and Jefferies Finance LLC provided debt commitments for the acquisition.  Kirkland & Ellis LLP served as legal counsel to Golden Gate Capital on the transaction.

Golden Gate Capital is a San Francisco-based private equity investment firm with over $12 billion of capital under management. The principals of Golden Gate have a long and successful history of investing across a wide range of industries and transaction types, including going-privates, corporate divestitures, and recapitalizations, as well as debt and public equity investments. Golden Gate is one of the most active investors in multi-unit consumer companies with leading brands. Representative investments include Ann Taylor, California Pizza Kitchen, Payless ShoeSource, Eddie Bauer, Express, Zales, J.Jill and Pacific Sunwear. For additional information, visit www.goldengatecap.com.

Darden Restaurants, Inc., (NYSE: DRI), the world’s largest full-service restaurant company, owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales.  Headquartered in Orlando, Fla., and employing more than 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people.  In 2014, Darden was named to the FORTUNE “100 Best Companies to Work For” list for the fourth year in a row.  Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s and Yard House – reflect the rich diversity of those who dine with us.  Our brands are built on deep insights into what our guests want.  For more information, please visit www.darden.com.