Olive Garden parent Darden Restaurants Inc. has entered into an agreement to acquire the 154-unit Ruth's Hospitality Group Inc. in a deal valued at about $715 million, the companies said Wednesday.
Orlando, Fla.-based Darden, which also owns the LongHorn Steakhouse and Cheddar’s Scratch Kitchen brands among others, said it will commence a tender offer of $21.50 a share for Ruth’s shares in an all-cash transaction. Fine-dining steakhouse Ruth’s Chris is based in Winter Park, Fla.
"Ruth's Chris is a strong and distinctive brand in the fine-dining segment with an impressive history of delivering elevated dining experiences to their loyal guests," said Rick Cardenas, Darden president and CEO, in a statement. "It fits the criteria we have for adding a brand to our portfolio and supports our winning strategy. Ruth's Chris is a great complement to our portfolio of brands, and I'm pleased to welcome their nearly 5,000 team members to Darden."
Ruth's Chris was founded in 1965 in New Orleans, La., by Ruth Fertel and features signature USDA Prime steaks on 500-degree plates, New Orleans-inspired sides and an extensive wine list. Ruth's Chris has 154 locations around the globe, including 80 company-owned or -operated restaurants and 74 franchised restaurants.
In fiscal 2022, it generated systemwide sales of more than $860 million, total revenues more than $500 million, and average annual restaurant volumes for company-owned or -operated locations of $6.2 million.
Cheryl Henry, Ruth’s Chris’ president, CEO and chair, said in a statement: @We are excited about the opportunity to join the Darden family. Our strategy and operating philosophy aligns well with Darden, and we have a strong cultural fit that should ensure a smooth transition.” Henry will continue to lead as president of Ruth's Chris and will report to Cardenas, the companies said.
Darden has a portfolio of fine-dining restaurants, including The Capital Grille, Seasons 52 and Eddie V’s.
The $715 million purchase price represents a 9.4-times implied multiple of Ruth's fiscal year 2022 transaction-adjusted earnings before income tax, depreciation and amortization.
Darden said it expects pre-tax synergies of between $5 million and $10 million within the first year, and between $15 million and $20 million in the second year. Total acquisition and integration-related expenses are expected to be about $55 million to $60 million.
The transaction is expected to be completed in June, subject to satisfaction of customary closing conditions. The deal has been unanimously approved by the boards of both Darden and Ruth's.
Hunton Andrews Kurth LLP acted as legal adviser to Darden. Jefferies LLC acted as exclusive financial adviser, and Kirkland & Ellis LLP acted as legal adviser to Ruth's.
As of Feb. 26, Darden had 1,890 casual-dining and fine-dining restaurants.
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