The board of Darden Restaurants Inc. has approved the upcoming real estate spin off in some of its properties that will let the company's new shares to be distributed in November 9.
In a report by wsj.com [Wall Street Journal], Long Horn Steak houses and Olive Garden's owners had been under activist investor Starboard Value LP's scrutiny. The owners are now awaiting ruling from Internal Revenue Service whether the spin- off will be passed as tax- free.
The report also detailed the arrangements once the spin- off succeed. According to the report, "Darden shareholders would receive a share in Four Corners Property Trust Inc. for every three of their Darden shares, with shareholders to receive cash for fractional shares. The real estate trust would trade on the New York Stock Exchange under the ticker symbol FCPT."
According to nrn.com [Nation's Restaurant News], Darden CEO Gene Lee said "Today's announcement is one of the final steps in the spin-off transaction, which will allow us to optimize the value of a significant portion of our captive real estate while also positioning two companies for success." He also added that Darden will benefit from the stronger financial position and improved capital structure once the deal pushed through.
Lee said the Four Corners "will be well positioned to efficiently dedicate financial resources and access capital markets to provide an attractive yield to shareholders with the immediate ability to grow and diversify."
The shares are expected to be distributed on November 9. 424 properties of Darden are said to be included in the spin off into real estate investment trust and the funds will be used to pay the company's debt of about $1 billion. The report by nrn.com also detailed that "the company (Darden) created Four Corners Property Trust or FCPT and then sold the properties to the trust and leased them back in a sale-leaseback deal."
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