Key Takeaways
- Darden Restaurants will buy Tex-Mex restaurant chain Chuy’s for $605 million in cash.
- The $37.50-per-share deal is a 48.4% premium over Chuy’s closing price Wednesday.
- Chuy’s has a 30-day “go-shop” option to look for other potential suitors.
Shares of Chuy’s Holdings (CHUY) soared Thursday after Darden Restaurants (DRI) announced it was buying the Tex-Mex restaurant chain for $605 million in cash.
The parent of Olive Garden, LongHorn Steakhouse, and other eateries said it was paying $37.50 per share for Chuy’s, a 48.4% premium over the stock’s closing price yesterday.
Darden CEO Says Chuy’s ‘Supports Our Winning Strategy’
Darden Chief Executive Officer (CEO) Rick Cardenas explained that based on the company’s criteria for expansion, “We believe Chuy’s is an excellent fit that supports our winning strategy.” Chuy’s has 101 locations in 15 states, and posted $450 million in revenue for the 12-month period ending March 31.
Darden anticipates the acquisition will not impact diluted earnings per share (EPS) in fiscal 2025, and will be accretive by $0.12 to $0.15 per share in fiscal 2027.
Under the terms of the deal, Chuy’s has a 30-day “go-shop” option to seek other buyers.
The news sent shares of Chuy’s Holdings surging 48% to $37.34 as of 10:34 a.m. ET Thursday. Darden Restaurant shares fell 1.6% to $144.95.