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."
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