Investor presses Outback’s parent for a sale or breakup

Jana Partners is resuming its call for a strategic redirection two years after a truce was struck.
Photograph courtesy of Outback Steakhouse

An activist investor with a 9% stake in Outback Steakhouse parent Bloomin’ Brands said it intends to press again for a sale, breakup or redirection of the multibrand casual-dining company.

The effort marks the second time in about two years that hedge fund Jana Partners has pressured the casual-dining giant to seek a sale of the company or its parts. In addition to Outback, Bloomin’ owns and operates Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Outback is Bloomin’s largest holding by far. Jana has argued that shareholders’ returns would be increased by breaking Bloomin’ into two companies: one built around Outback, a fairly mature brand, and the other a growth enterprise founded on the smaller, less-developed brands. 

A truce was struck in March 2018 when Bloomin’ agreed to award a seat on its board of directors to a Jana representative, Wendy Beck. In return, Jana agreed to drop its agitation for change, and began selling shares. 

The new push for a fundamental upheaval of Bloomin’ follows Jana’s buildup starting July 9 of another large stake in the casual-dining company. The hedge fund said in a securities filing that it has spent $127.7 million to raise its Bloomin’ holdings to 7.8 million shares, or 9% of shares outstanding. 

In a securities filing, Jana stated that it intends and expects to have discussions with Bloomin’s management and board of directors about a “sale, divestitures, capital allocation, operations and board composition.”  

“We appreciate the views of stockholders and will consider all perspectives shared with us,” a Bloomin’ spokesperson said in an email to Restaurant Business.

Jana Partners is run by Barry Rosenstein, a former subordinate of the corporate raider Asher Edelman. Past holdings have included a large stake in Whole Foods Market prior to its acquisition by Amazon. 

One of the nation’s largest full-service restaurant companies, Bloomin’ operates 1,045 units and franchises another 81 in the United States. Outback accounts for about 732 of those domestic stores.

For the second quarter, the company posted a net income of $29.8 million, an 8.6% increase from the year-ago quarter, on revenues of $1.02 billion, a slip of less than 1%. 

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