Red Lobster Chain Sold for $2.1 Billion

Darden Restaurants sold the seafood chain to private investment firm Golden Gate Capital.
3:37 | 05/16/14

Coming up in the next {{countdown}} {{countdownlbl}}

Coming up next:

{{nextVideo.title}}

{{nextVideo.description}}

Skip to this video now

Now Playing:

{{currentVideo.title}}

More information on this video
Enhanced full screen
Explore related content
Comments
Related Extras
Related Videos
Video Transcript
Transcript for Red Lobster Chain Sold for $2.1 Billion
Okay. It's Friday may sixteenth the markets -- new -- opening today's big number two point one billion dollars. That is how much the entire chain of Red Lobster Seafood Restaurants is worth. That's according to a deal announced just this morning. Everyone TG IF from Dan Cutler in New York so here with the lobster bib and melted butter all set for the weekend -- central if not finance mr. Santo at howry today certain. A so what you're -- the. It is -- Darden Restaurants is the parent company of red lobster its own red lobster from its long history in fact. The company the -- -- used to be part of General Mills that goes back a long way. But they don't read -- they also -- olive garden they're selling red lobster as a standalone business to -- gate capital which is a private equity firm. And it's interesting because it comes as Darden was pressured to do something about red lobster he really has had a struggle trying to grow sales -- the -- obviously they rely a lot on discounting it's been difficult to get kind of higher end customers and they're willing to pay out. I even though they still remain popular and is 800 red lobster locations. It's been kind of a no growth business so there's sort of selling it and hope that they can use the cash more profitably with -- other businesses. Arsenal what are we LA kind of plants -- from goal in late goal -- -- capitalism to -- got to turn that company around. We don't know too much indeed tell about their plans what I will say is golden gate capital is a private investment from that is focused on the retail and restaurant industries. It currently owns California Pizza Kitchen. It is had investments in the past and -- is macaroni grill they also owned Andy bowers and H they have a sense of consumer businesses. Large chains. In in malls and such -- and that kind of thing so they do have an expertise in trying to maximize both the real estate value and try to spruce up sales may be redesigned restaurant I would also say. I would think it's highly likely that they -- to selectively closed down some red lobster locations. Because often when a company is having a hard time growing -- sell it to private equity firms. The private equity firms can kind of be free to shrink a business that needs to be -- Whereas when it's part of a -- public company it's hard to kind of say hey we're no longer growth business anymore so I wouldn't be surprised. If they tried to close underperforming locations and streamline the change. What about all of arguments they're also part of the Dart Group as well is that companies not been doing too hot either have -- It is not knowing this is a look -- the casual restaurant sector in general has struggled it's a mature. Part of the restaurant industry Darden expanded olive -- at a very rapid pace of the ninety's in the last decade and -- are now kind of at a standstill and it's no longer. You know kind of an exciting brand people -- it may be tired of -- on some level. And Darden as a as a company has been under pressure by an activist hedge fund investment firm. To trying to break up the company in a more comprehensive way Darden responded by saying well maybe -- spin off -- -- red lobster but others would like to see them. You know package red lobster and olive garden together. As they're kind of mature businesses in and maybe. Focus to some -- -- the faster growing chains like capital -- longhorn steakhouse so olive garden is no obvious fix right there they've tried various menu. New designs and things like that but it seems as if right now. Darden is mostly going to focus on trying to turn olive garden around because that remains by far the biggest piece of the company after the red lobster sale. Interesting staple of the American landscape as far as in the restaurant dining goes my -- looked -- who finance Mike thanks so much have a good weekend. All right you -- -- then of course you can keep up the latest headlines right here on abcnews.com. You that much in the big number I'm Dan Cutler in New York.

This transcript has been automatically generated and may not be 100% accurate.

{"id":23754046,"title":"Red Lobster Chain Sold for $2.1 Billion","duration":"3:37","description":"Darden Restaurants sold the seafood chain to private investment firm Golden Gate Capital.","section":"Business","mediaType":"Default"}