SCHEDULE: Starboard Value Cuts Voting Stake in Bloomin' Brands

Starboard Value LP reduced its voting power in Bloomin' Brands to 4.9% by shifting 3.8 million shares into cash-settled total return swaps.

Summary

• Starboard Value LP and its affiliates sold 3,800,000 shares of Bloomin' Brands common stock at a price of $8.12 per share on May 8, 2026.
• Simultaneously, the reporting persons entered into cash-settled total return swaps for 3,800,000 notional shares with a third-party financial institution.
• Beneficial ownership of voting shares decreased to 4,180,992 shares, representing 4.9% of the company, down from a previously higher percentage.
• Total economic exposure remains significant at 8,008,111 shares, or approximately 9.3% of the outstanding common stock.
• The cash-settled swaps have a maturity date of November 8, 2027, and do not provide voting or dispositive power over the underlying shares.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral, strategic regulatory move. While voting power decreased, the total economic conviction remains unchanged at 9.3%, indicating Starboard is not exiting its financial position.

Positives

• Starboard maintains a high total economic interest of 9.3%, indicating continued conviction in the company's potential value.
• The use of swaps allows the investor to maintain financial exposure while potentially avoiding certain regulatory or restrictive thresholds.
• The transaction was executed at a clear market price of $8.12 per share.

Negatives

• Starboard's direct voting power has been reduced to 4.9%, which may decrease their immediate influence on corporate governance and shareholder votes.
• The reporting persons have ceased to beneficially own more than 5% of the outstanding shares, which changes their regulatory reporting status.

Risks

• Cash-settled swaps do not grant the holder the right to vote or direct the voting of the underlying shares.
• The investor is subject to counterparty risk with the unaffiliated third-party financial institution involved in the swap agreements.
• The maturity of the swaps on November 8, 2027, creates a future liquidity event or a need for rollover, which could impact the stock depending on market conditions.

Future Outlook

Starboard continues to hold a 9.3% economic stake in the company through a combination of direct ownership and derivatives maturing in late 2027, suggesting they remain a significant, albeit less 'visible' in terms of voting power, stakeholder for the next 18 months.

Management Comments

• The reporting persons specifically disclaim beneficial ownership of the securities reported herein that they do not directly own.
• The swaps provide economic results comparable to ownership but do not provide the power to vote or direct the disposition of the subject shares.

Industry Context

StockSavvy.ai notes that activist investors frequently use total return swaps to maintain economic upside while staying below the 5% beneficial ownership threshold. This tactic can be used to avoid triggering 'poison pill' provisions or to reduce the frequency of required regulatory disclosures while still profiting from a turnaround or sale of the company.

Comparison to Industry Standards

• Starboard's move is a standard tactical adjustment seen in other activist campaigns, such as those by Elliott Management, to decouple economic interest from voting power.
• The 9.3% total exposure remains high compared to typical passive institutional holdings, which usually range between 1% and 5%.
• The use of cash-settled derivatives is a common method for sophisticated funds to manage regulatory footprints in the U.S. consumer discretionary sector.

Management Changes

Stakeholder Impact

• Shareholders: May see reduced immediate pressure on the board from Starboard due to lower voting power.
• Management: May have slightly more breathing room in proxy contests, though Starboard remains a major economic stakeholder.
• Regulators: Starboard is no longer required to report as a >5% beneficial owner under certain Section 13(d) rules.

Next Steps

• Monitor for any further changes in Starboard's economic exposure or potential re-acquisition of voting shares.
• Observe the company's performance leading up to the swap maturity date in November 2027.

Key Dates

Recommendation

The investor has maintained their full economic exposure to the company, suggesting they still believe in the upside. However, the reduction in voting power suggests a shift away from an aggressive immediate activist stance, making a 'hold' the most prudent position until further strategic intent is clarified.

Keywords

Bloomin' Brands, Starboard Value LP, Jeffrey C. Smith, Schedule 13D, Total Return Swaps, Beneficial Ownership, Activist Investor, Common Stock, Outback Steakhouse