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Darden to sell Red Lobster for $2.1 billion | Restaurants

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Darden to sell Red Lobster for $2.1 billion
Restaurants
Darden to sell Red Lobster for $2.1 billion

Roger Yu, USA TODAY

Darden Restaurants said Friday it agreed to sell Red Lobster and related real estate assets to investment firm Golden Gate Capital for $2.1 billion, shedding its worst performing chain to pay off some company debt.

In the cash deal, Darden will receive net cash proceeds, after tax and transaction costs, of about $1.6 billion. The Orlando-based restaurant company plans to use $1 billion to pay off debt and use the rest to buy back shares.

Darden has been seeking to sell the seafood restaurant chain for months to ease its debt levels and also reached out to real estate buyers to facilitate sale-leaseback financing for the purchase of the business.

Darden said it chose Golden Gate to do the deal because it's an all-cash transaction and allows the company to maintain its dividend. Darden expects to maintain its current quarterly dividend of 55 cents per share, or $2.20 per year.

Shares of Darden fell 0.87% in pre-market trading to $50.25.

Red Lobster has been a laggard among Darden's chains. In the three-months period ending Feb. 23, Red Lobster's sales fell 8.7% from a year ago to $611 million.

In comparison, sales at its LongHorn Steakhouse chain rose 0.3%, while Olive Garden reported a 5.4% decline.

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