Saturday, February 24, 2018
Business

Controversial seafood supplier buys $575 million stake in Red Lobster

ORLANDO — Controversial seafood supplier Thai Union has bought a $575 million stake in Orlando-based Red Lobster, the companies announced Monday.

Red Lobster and owner Golden Gate Capital said Thai Union bought a minority stake in the 700-restaurant seafood chain.

"Their investment underscores the confidence they have in our business and our team, both here in Orlando and in our restaurants across the country," Red Lobster CEO Kim Lopdrup said in a statement to the Orlando Sentinel. "Red Lobster has great growth potential, and the ability to leverage Thai Union's global presence and expertise, along with the support of our majority owner Golden Gate Capital, will position us for continued long-term success."

In the deal, Thai Union paid $230 million for a 25 percent stake in the company, as well as $345 million for a 24 percent stake that it will be able to convert in 10 years, according to documents filed with the Stock Exchange of Thailand.

Red Lobster had $2.479 billion in sales for the 12-month period that ended in August, the documents showed. It had an operating profit of $144 million.

Thai Union came under scrutiny in 2015 when an Associated Press investigation tied the supplier to slavery in Southeast Asian fishing waters and at factories. Thai Union said it cut ties with contractors accused of using slave labor. The Associated Press won the Pulitzer Prize in public service reporting for the investigation.

Thai Union is the world's largest seafood supplier and the owner of seafood brands including Chicken of the Sea, King Oscar, John West and Petit Navire.

"Thai Union's investment is a testament to the great progress Red Lobster has made and the tremendous growth potential ahead," Golden Gate Capital managing director Josh Olshansky said in a statement. "Red Lobster has fantastic momentum, as the company has increased profitability each year since Golden Gate's acquisition and guest satisfaction is at an all-time high."

Darden sold Red Lobster under pressure in July 2014 for $2.1 billion. Golden Gate Capital immediately sold Red Lobster's real estate assets for $1.5 billion.

The $575 million investment price would mean that Red Lobster is worth about $920 million, according to Thai Union's valuation.

Red Lobster is headquartered in downtown Orlando. It has 58,000 employees nationwide.

The company will continue to use the same suppliers, Red Lobster spokeswoman Nicole Bott said, particularly on things such as lobster.

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