Darden Restaurants Inc. announced after the markets closed Wednesday that it agreed to buy all of the outstanding shares of Chuy’s Holdings Inc. for $37.50 per share in an all-cash transaction with an enterprise value of about $605 million.
The per-share price is a 48.4 percent premium over Wednesday’s close and 40 percent premium over the 60-day volume weighted average price.
The deal comes with a 30-day “go-shop” period that will allow Chuy’s to solicit alternative proposals from interested parties.
The transaction is expected to close in Darden’s fiscal second quarter if it clears a majority of Chuy’s stockholders.
Darden said Chuy’s will complement its portfolio of brands, which includes Olive Garden, LongHorn Steakhouse, Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V’s and Bahama Breeze.
Darden tapped BofA Securities as financial advisor and Hunton Andrews Kurth as legal advisor led by M&A lawyers Charlie Brewer in Richmond, M&A team co-head Steven Haas in New York and Jessica Rivero in Miami.
Hunton Andrews Kurth’s team also included capital markets partner Mayme Donohue in Richmond, employee benefits partner Jessica Agostinho in Washington, D.C. and associate Jordan Latham in Houston and antitrust and competition partner Kevin Hahm and associate Bennett Sooy, both in Washington D.C.
Chuy’s used Piper Sandler and Winston & Strawn co-led from Dallas by partners Charlie Haag and Justin Reinus (the two advised Chuy’s on a $50 million ATM in 2020 during the pandemic).
The Winston team also included Dallas partners Andrew Betaque, Masae Ellis and Chip Gage along with associate Madison Bennett in Houston and associates Ben Chrisman, Jennifer Ybarra Taylor, Tori Newton, Emily Semon, MacKenzie Cerwick, Jara Jacobson, Michelle Tuma and Regina Maze — all from Dallas — along with other firm lawyers in New York, Chicago, San Francisco and Washington, D.C.
Last year, Hunton Andrews Kurth represented Darden in its $715 million acquisition of the owner of the Ruth’s Chris.
Founded in Austin in 1982, Chuy’s owns and operates full-service restaurants serving a menu of authentic, made-from-scratch Tex-Mex inspired dishes. Chuy’s had 101 restaurants in 15 states as of July 16 and generated revenues of more than $450 million in the latest 12 months ending March 31 and average annual restaurant volumes of $4.5 million.
“Chuy’s is a differentiated brand within the full-service dining industry with strong performance and growth potential,” Darden president and CEO Rick Cardenas said in a statement. “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.”
Steven Hislop, chairman, CEO and president of Chuy’s, said Darden shares many of Chuy’s core values, particularly its operating philosophy and team member cultures. “Together we will accelerate our business goals and bring our authentic, made-from-scratch Tex-Mex to more guests and communities,” he said.
The purchase price represents a 10.3 times multiple of Chuy’s EBITDA for latest 12 months ending March 31.
Darden expects pre-tax net synergies of $15 million by the end of its fiscal 2026 and acquisition and integration-related expenses to be around $50 million to $55 million pre-tax. The deal is expected to be neutral to its diluted net earnings per share for its fiscal 2025, excluding acquisition and integration-related expenses, and accretive by about 12 cents to 15 cents in its fiscal 2027.
Darden said it has sufficient liquidity to complete the all-cash transaction. The buyer expects to continue to maintain a strong balance sheet and have enough capital to achieve its capital allocation priorities of maintaining existing restaurants, growing new restaurants and returning capital to shareholders through dividends and strategic share repurchases.