Darden Restaurants To Buy Ruth's Hospitality For $715 Mln In Cash; RUTH Stock Up In Premarket

Darden Restaurants, Inc. (DRI) announced Wednesday a definitive merger agreement to acquire Ruth’s Hospitality Group, Inc. (RUTH) in an all-cash transaction with an equity value of around $715 million.

In pre-market activity on Nasdaq, Ruth’s shares were gaining around 34 percent to trade at $21.44.

As per the deal, Darden will commence a tender offer to acquire all shares of Ruth’s for $21.50 per share.

The per share price represents a 34% premium to the May 2 closing price and a 32% premium to the 30-day volume weighted average price.

With the deal, Darden expects pre-tax synergies of between $5 and $10 million within the first year, and between $15 and $20 million in the second year.

The acquisition is expected to be accretive to Darden’s diluted net earnings per share in fiscal year 2024 by approximately 10 to 12 cents, excluding acquisition and integration-related expenses.

The transaction has been unanimously approved by the boards of directors of both Darden and Ruth’s, and is expected to be completed in June, subject to satisfaction of customary closing conditions.

Cheryl Henry will continue to lead as President of Ruth’s Chris and will report to Rick Cardenas.

With the acquisition, Ruth’s, owner and operator of Ruth’s Chris Steak House, will complement Darden’s portfolio of differentiated brands which currently includes Olive Garden, LongHorn Steakhouse, Yard House, Cheddar’s Scratch Kitchen, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s.

In the deal, Hunton Andrews Kurth LLP is acting as legal advisor to Darden. Jefferies LLC is acting as exclusive financial advisor, and Kirkland & Ellis LLP is acting as legal advisor to Ruth’s.

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