Darden Restaurants is breaking itself up.
Along with its earnings release on Tuesday morning, the restaurant operator announced that its board has approved the sale of some of its real estate assets to establish of a Real Estate Investment Trust.
In the statement, CEO Gene Lee said: “This strategic real estate plan is the result of a comprehensive review of alternatives to best take advantage of our real estate portfolio. While a significant amount of work remains in order to proceed with the REIT Transaction, we believe this plan will result in a more optimised capital structure and will create long-term shareholder value.”
About 430 of Darden’s restaurants, which include Olive Garden and LongHorn Steakhouse, will be transferred to the REIT.
The company reported fourth quarter sales of $US1.88 billion, slightly more than analysts’ estimates for $US1.87 billion, according to Bloomberg.
Darden reported adjusted earnings per share of $US1.08, better than the $US0.93 that was forecast.
Darden had been the target of a campaign by activist hedge fund Starboard Value, which in 2014, released a huge slideshow detailing problems in Olive Garden.
Shares rose as much as 6% in premarket trading.