Darden Restaurants to Acquire Chuy's Holdings, Inc. in Approximately $605 Million Transaction

Core Viewpoint - Darden Restaurants, Inc. has announced its acquisition of Chuy's Holdings, Inc. for $37.50 per share in an all-cash transaction valued at approximately $605 million, enhancing Darden's portfolio of restaurant brands [1][4]. Company Overview - Chuy's, founded in 1982 in Austin, Texas, operates full-service restaurants with a focus on authentic Tex-Mex cuisine, boasting 101 locations across 15 states and generating over $450 million in total revenues for the twelve months ending March 31, 2024 [2][11]. - Darden's existing portfolio includes well-known brands such as Olive Garden, LongHorn Steakhouse, and Ruth's Chris Steak House [1][10]. Transaction Details - The acquisition price of $37.50 per share represents a 40% premium over Chuy's 60-day volume weighted average price and an implied multiple of 10.3x Chuy's latest twelve months ending March 31, 2024 Transaction Adjusted EBITDA [4][6]. - Darden anticipates pre-tax net synergies of approximately $15 million by the end of fiscal 2026, with total acquisition and integration-related expenses expected to be around $50 to $55 million [4][8]. - The transaction is projected to be neutral to Darden's diluted net earnings per share for fiscal 2025, and accretive by approximately 12 to 15 cents in fiscal 2027 [4][8]. Strategic Fit - Darden's President and CEO, Rick Cardenas, emphasized that Chuy's is a differentiated brand with strong performance and growth potential, aligning with Darden's strategy to diversify its portfolio into new dining categories [3][4]. - Chuy's CEO, Steven Hislop, expressed enthusiasm about joining Darden, highlighting shared core values and the potential to accelerate business goals [3][4]. Approval and Timeline - The merger agreement has been unanimously approved by the boards of directors of both companies, with a 30-day "go-shop" period allowing Chuy's to solicit alternative proposals [4][6]. - The transaction is expected to close in Darden's fiscal second quarter, pending customary closing conditions [4][8].