Darden Restaurants has completed the acquisition of Chuy's Holdings in an cash deal with an enterprise value of $605m.
The deal, announced in July 2024 and approved by a majority of Chuy's stockholders on 10 October, enhances Darden's portfolio of differentiated brands, including Olive Garden and LongHorn Steakhouse.
The acquisition was financed partly from the proceeds of a $400m offering of 4.350% senior notes due in 2027, and from a $350m offering of 4.550% senior notes due in 2029, which was issued on 3 October 2024.
Chuy's, known for its authentic, made-from-scratch Tex-Mex dishes, operates more than 100 restaurants across 15 US states.
It generated $450m in total revenues and an average annual restaurant volume of $4.5m in the twelve months ending 31 March 2024.
The purchase price of $37.50 per share represents a 40% premium on Chuy's 60-day volume-weighted average price and a 10.3x implied multiple of the adjusted EBITDA [earnings before interest, taxation, depreciation and amortisation] for the period ending 31 March 2024.
Darden anticipates pre-tax net synergies of $15m by the end of fiscal 2026, with acquisition and integration-related expenses projected between $50m and $55m.
Chuy's Holdings common stock has ceased trading on the Nasdaq.
BofA Securities and Hunton Andrews Kurth served as financial and legal advisors to Darden respectively, while Piper Sandler and Winston & Strawn provided the same services to Chuy's.
The deal is expected 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.
At the time of the deal's announcement, Darden Restaurants president and CEO Rick Cardenas said: “Chuy's is a differentiated brand within the full-service dining industry with strong performance and growth potential.
"Based on our criteria for adding a brand to the Darden portfolio, we believe Chuy's is an excellent fit that supports our winning strategy. I am excited to welcome their 7,400 team members to Darden and diversify the Darden portfolio into a new dining category."
