Chuy’s Holdings Inc. shareholders are to vote Oct. 10 on the announced sale to casual-dining powerhouse Darden Restaurants Inc., but the company has received 13 demand letters and two complaints that the price of $37.50 a share was not high enough.
The 101-unit Austin, Texas-based Chuy’s earlier this week filed a revised proxy statement with the Securities and Exchange Commission to allay shareholder concerns.
While Chuy’s said in its revision that it considered the shareholder actions “without merit,” it issued updated disclosures about how the sale price was determined.
“These supplemental disclosures will not change the consideration to be paid to the company’s stockholders in connection with the merger or the timing of the special meeting,” Chuy’s said, adding that its board recommended shareholders vote for the merger.
In July, Darden Restaurants Inc., parent to Olive Garden, LongHorn Steakhouse, and Cheddar’s Scratch Kitchen, agreed to buy Chuy's in a $605 million deal. Orlando, Fla.-based Darden, which acquired the fine-dining Ruth’s Chris Steak House a year ago, said the deal called for Darden to acquire all of the outstanding shares of Chuy's for $37.50 per share.
The price was set in consultation with Piper Sandler, Chuy’s adviser in the sale. Piper calculated the price as 10.9 times EBITDA, or earnings before interest, taxes, depreciation, and amortization.
Comparative acquisitions over the past few years, as cited in the SEC documents, included 5.8 times EBITDA for The One Hospitality Group’s buy of Safflower Holdings, parent to RA Sushi and Benihana, in March and 9.4 times EBITDA for Darden’s buy of Ruth’s Chris Steakhouse in June 2023.
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