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Investor calls for Bloomin’ Brands to let Outback Steakhouse stand alone

TAMPA — A second activist investor is calling for a big shake-up at Bloomin’ Brands Inc.

In a letter to Bloomin’s CEO, Barington Capital Group, a New York-based investment firm, urged the Tampa-based restaurant conglomerate to let Outback Steakhouse operate on its own and move Bloomin’s remaining brands into a new company.

Related coverage: Up for sale? Activist investor grabs stake in Tampa’s Bloomin’ Brands

The proposed spin-off would include Carrabba’s Italian Grill, Fleming’s Prime Steakhouse and Bonefish Grill. In a letter sent to Bloomin’ CEO Liz Smith on Wednesday, Barington CEO James Mitarotonda said serving steaks at Outback is "considerably different" than serving fish at Bonefish or Italian cuisine at Carrabba’s.

"Barington is concerned by the company’s sustained period of underperformance relative to its peers and the market as a whole under its current management team," the investment firm said in a Wednesday release.

The group also wants Bloomin’ leadership to pull back on "excessive expenses" and "improve the company’s corporate governance and the composition of its board of directors."

"If Bloomin’ effectively executes its recommendations," Barington’s statement read, "the value of the company’s stock could increase to approximately $41 per share."

Bloomin’s stock closed Wednesday at $22.02 per share, up $1.13 or just over 5 percent.

The company has seen a drop in sales for some of its restaurants in recent years. In the third quarter of 2017, it reported a 5.6 percent dip in revenue and a 79 percent decline in net income.

Related coverage: Outback Steakhouse, Carrabba’s experimenting with takeout-only locations

In a statement, Bloomin’ said it "welcomes open communication with shareholders and constructive input." The company is scheduled to release its fourth-quarter earnings for 2017 Thursday.

"We look forward to continuing to engage with our shareholders to advance our common goal of further enhancing value," Bloomin’ said.

Barington’s website describes the firm as an activist investor that "invests in undervalued publicly traded companies that it believes can appreciate significantly in value as a result of a change in corporate strategy or improvements in operations, capital allocation or corporate governance."

This isn’t Bloomin’s first experience with an investor who wasn’t pleased with the company’s performance. Late last year, Jana Partners, a New York-based hedge fund, bought an 8.74 percent stake — about $140 million.

The fund’s principal owner, Barry Rosenstein, filed with the Securities and Exchange Commission saying that he might push Bloomin’ to think about "exploring a sale" of the company.

Last year, Jana urged Whole Foods Market to explore options.

Contact this reporter at [email protected] or (727) 892-2249. Follow @malenacarollo.

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