Darden Restaurants has entered into an 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 purchase price is approximately 9x Red Lobster’s EBITDA for the twelve months ending April 27, 2014. Darden expects the sale of the Red Lobster business to close in the first fiscal quarter of 2015.
Red Lobster is a casual dining restaurant chain with705 Red Lobster locations worldwide. The company has operations in Canada, Saudi Arabia, the United Arab Emirates, Qatar and Japan. Red Lobster was founded in March 1968 by entrepreneurs Bill Darden and Charley Woodsby and is based in Orlando (www.redlobster.com).
“Red Lobster is an exceptionally strong brand with an unparalleled market position in seafood casual dining,” said Josh Olshansky, Managing Director at Golden Gate Capital. “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 CEO Kim Lopdrup and the management team to support the long-term success of Red Lobster.”
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, the proceeds of which will be used to support the financing of Golden Gate Capital’s purchase of Red Lobster.
Deutsche Bank Securities and Jefferies are serving as financial advisors to Golden Gate Capital in connection with the transaction. Goldman, Sachs & Co. is serving as Darden’s exclusive financial advisor on the sale of Red Lobster.
Golden Gate Capital targets companies across a range of industries and transaction types, including leveraged buyouts, recapitalizations, corporate divestitures and spin-offs, build-ups and venture stage investing. The firm has approximately $12 billion of capital under management and is based in San Francisco (www.goldengatecap.com).
Darden Restaurants (NYSE: DRI) is a multi-brand restaurant operator headquartered in Orlando. The firm owns several casual dining restaurant brands: Olive Garden, LongHorn Steakhouse, Red Lobster, Bahama Breeze, Seasons 52, Eddie V’s Prime Seafood, The Capital Grille and Yard House. Darden has more than 2,100 restaurant locations and more than 200,000 employees, making it the world’s largest full-service restaurant company (www.darden.com).
© 2014 PEPD • Private Equity’s Leading News Magazine • 5-16-14