Darden Restaurants announced the sale of its Red Lobster business for $2.1 billion on Friday. San Francisco based private equity firm Golden Gate Capital will purchase of the popular seafood franchise and related assets. The bulk of the sale’s proceeds will be used to settle outstanding debt.
“Today’s announcement is the culmination of a highly competitive process designed to maximize the value of the Red Lobster business and better position Darden for success,” said lead director of Darden’s board Chuck Ledsinger in a statement.
According to the announcement, the purchase price is nine times Red Lobster’s 12-month earnings ending on April 27. The sale is expected to close in early 2015 and provide the company with $1.6 billion in cash. About $1 billion will be used to retire debt, the remaining funds will be used to repurchase shares.
The company has been mulling either the sale or spin-off of its Red Lobster brand due to the chain’s inability to move up-market. On a December conference call with shareholders, Darden CEO Clarence Otis announced the pending sale of Red Lobster as part of an effort to increase the company’s value.
Golden Gate Capital has stakes in California Pizza Kitchen, Payless ShoeSource, and Express clothing stores.
More Must-Reads from TIME
- Why Trump’s Message Worked on Latino Men
- What Trump’s Win Could Mean for Housing
- The 100 Must-Read Books of 2024
- Sleep Doctors Share the 1 Tip That’s Changed Their Lives
- Column: Let’s Bring Back Romance
- What It’s Like to Have Long COVID As a Kid
- FX’s Say Nothing Is the Must-Watch Political Thriller of 2024
- Merle Bombardieri Is Helping People Make the Baby Decision
Contact us at letters@time.com