Darden Restaurants Inc (DRI.N) said on Friday it would sell Red Lobster to private equity firm Golden Gate Capital for $2.1 billion in cash, defying activist investors who opposed plans to shed the struggling seafood chain.

Darden said the sale was not subject to shareholder approval and should close in the quarter ending in August. Its shares were down 3.9 percent at $48.73 in afternoon trading on the New York Stock Exchange.

Hedge fund Starboard Value LP, which owns about 5.5 percent of Darden’s outstanding shares, opposed a sale or spinoff of Red Lobster, saying it could wipe out as much as $800 million of shareholder value.

“The announced sale woefully undervalues Red Lobster and its real estate assets,” Starboard Chief Executive Officer Jeffrey Smith said in a statement on Friday.

Starboard successfully led a shareholder effort to force Darden to hold a special meeting and vote on the Red Lobster divestiture plan. However, the meeting has not yet been set by Darden and some shareholders are concerned the deal will close before investors can weigh in.

Darden on Friday said it would file a preliminary proxy statement later this month for the special meeting and to convene it “as promptly as practicable.”

That plan did not satisfy Starboard.

“It appears that Darden has instead sold Red Lobster in a rushed transaction at a severe discount,” Smith said.

 

Read Full Story At Reuters.