Deals and IPOs

Darden sells Red Lobster to Golden Gate Capital for $2.1B

Darden sells Red Lobster for $2.1B

Darden Restaurants on Friday said it agreed to sell its struggling Red Lobster restaurant chain to Golden Gate Capital for $2.1 billion.

The company said it expects net cash proceeds of about $1.6 billion, of which about $1 billion would be used to retire debt.

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The remainder would be used to buy back up to $700 million of shares in fiscal 2015, Darden said.

Pedestrians pass in front of a Red Lobster restaurant in New York.
Victor J. Blue | Bloomberg | Getty Images

The company said in December that it planned to spin off or sell the 705-restaurant Red Lobster seafood chain, and said at the time that the transaction would not require a shareholder vote.

Investor Starboard Value had opposed the sale, calling on the company in January to rethink its strategy for improving results.

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Shares of Darden, which peaked at around $56 in September 2012, moved higher in premarket trading following the announcement. (Click here for the latest quote.)

By Reuters. CNBC contributed to this report.