Bloomin’ Brands Investor Relations: Activist Investor Starboard Value Takes Stake In Chain
Key takeaways
- Bloomin’ Brands now has private investment firm Starboard Value as a top-five shareholder
- Starboard now has a 9.9% stake in the restaurant chain in a bid to boost profits
- Bloomin’ Brands shares were up 10% in premarket trading on Thursday at the news
Bloomin’ Brands shares soared late last week after it was revealed activist investor, Starboard Value, had taken a 5% further stake in the casual restaurant business. Home to many brands, Bloomin’s latest quarterly results were so-so — and Starboard has a track record for delivering restaurant turnarounds. Here’s what we know so far.
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Why has Starboard Value invested?
Private investment firm Starboard Value has acquired a larger stake in casual restaurant chain Bloomin’ Brands. There aren’t any details on how much the purchase was, but Starboard now has a 9.9% stake in the business and is one of Bloomin’ Brands’ top-five shareholders in a deal thought to be worth $240 million.
Florida-based Bloomin’ Brands is the parent company of several restaurant franchises, including Outback, Bonefish Grill and Fleming’s Prime. With over 1,000 locations nationwide, Bloomin’ Brands is one of the largest casual dining chains in the U.S.
The move’s been made in a bid to improve Bloomin’s performance and share price. While Bloomin’ saw a net income of $68.2 million for the latest quarter compared to a loss of $63.6 million last year, the company’s net revenue declined to $1.12 billion from $1.15 billion at the same time last year.
What was the market reaction?
Bloomin’ Brands’ stock price had begun the week higher as a large stock purchase was made by Morgan Stanley on Tuesday, which is Starboard’s prime broker, gaining 4.3% between Friday’s close and Tuesday. Once the news broke, Bloomin’s share price was up 10% in premarket trading and closed the week for $28, in a vote of confidence for Starboard’s move.
The investment firm has pulled this move before — in 2014 it bought a stake in Darden, the parent company of Olive Garden, replacing the business’ full board of directors. In 2019 Starboard purchased a stake in Papa John’s to rehabilitate the company’s image after the founder’s scandal, with the stock having doubled since Starboard got involved.
The bottom line
Starboard’s interest in Bloomin’ certainly bodes well for the company’s share price, given Starboard’s record in turning around struggling restaurant brands. And Bloomin’ Brands needs a boost to its bottom line if it will survive the current squeeze on consumer spending. This could be the push the chain needs to turn the financials around.
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