Darden Restaurants to Acquire Chuy's Holdings, Inc. in Approximately $605 Million Transaction
Founded in
"Chuy's is a differentiated brand within the full-service dining industry with strong performance and growth potential," said Darden President and CEO
Highlights
- Darden has agreed to acquire Chuy's for
$37.50 per share in cash, with a total transaction enterprise value of approximately$605 million , a 40% premium to the 60-day volume weighted average price. - Purchase price represents a 10.3x implied multiple of Chuy's latest twelve months ending
March 31, 2024 Transaction Adjusted EBITDA.* - Darden expects pre-tax net synergies of approximately
$15 million by the end of its fiscal 2026. - Total acquisition and integration-related expenses are expected to be approximately
$50 to$55 million , pre-tax. - Expected to be neutral to Darden's diluted net earnings per share for its fiscal 2025, excluding acquisition and integration-related expenses, and accretive by approximately 12 to
15 cents in its fiscal 2027. - Transaction is expected to be completed in Darden's fiscal second quarter, subject to satisfaction of customary closing conditions.
- The transaction has been unanimously approved by the boards of directors of both Darden and Chuy's.
* See the "Non-GAAP Information" below for more details, including Darden's definition of Transaction Adjusted EBITDA and a reconciliation to Chuy's Net Income. |
Summary of the Transaction
Under the terms of the merger agreement, Darden will acquire all of the outstanding shares of Chuy's for
Darden has sufficient liquidity to complete the all-cash transaction. Darden expects to continue to maintain a strong balance sheet and have sufficient capital to achieve its stated capital allocation priorities of maintaining existing restaurants, growing new restaurants and returning capital to shareholders through dividends and strategic share repurchases.
The transaction is expected to close in Darden's fiscal second quarter subject to certain conditions set forth in the merger agreement, including the approval by a majority of Chuy's stockholders, the expiration or termination of the applicable waiting period under the HSR Act and other customary conditions.
Advisors
Piper Sandler is acting as financial advisor and
Investor Conference Call
Darden will host a conference call to discuss the transaction on
About Darden
Darden is a restaurant company featuring a portfolio of differentiated brands that include Olive Garden,
About Chuy's
Founded in
Additional Information and Where to Find It
This communication is being made in connection with the transaction. In connection with the transaction, Chuy's plans to file a proxy statement and certain other documents regarding the transaction with the
Participants in the Solicitation
Chuy's, its directors and certain of its executive officers may be considered participants in the solicitation of proxies from Chuy's stockholders in connection with the transaction. Information about the directors and executive officers of Chuy's is set forth in its Annual Report on Form 10-K for the year ended
These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials in connection with the transaction to be filed with the
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this document, other than purely historical information, including statements relating to the acquisition of Chuy's by Darden and any statements relating to Chuy's business and goals and Darden's expected operating results and balance sheet, and the assumptions upon which those statements are based, are "forward-looking statements." These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "believes," "plans," "anticipates," "projects," "estimates," "expects," "intends," "strategy," "future," "opportunity," "goal," "may," "will," "should," "could," "potential," "continues," or similar expressions. Forward-looking statements are based on management's current expectations and beliefs, as well as a number of assumptions, estimates and projections concerning future events and do not constitute guarantees of future performance. These statements are subject to risks, uncertainties, changes in circumstances, assumptions and other important factors, many of which are outside management's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.
Such forward-looking statements include those relating to the ability to complete, and the timing of completion of, the transactions contemplated by the merger agreement, including the parties' ability to satisfy the conditions to the consummation of the merger and the other conditions set forth in the merger agreement and the possibility of any termination of the merger agreement. Actual results may differ materially from current expectations because of numerous risks and uncertainties including, among others: (i) the risk that the proposed transaction may not be completed in a timely manner or at all; (ii) uncertainty surrounding the number of shares of Chuy's common stock that will vote in favor of the merger; (iii) the risk of legal proceedings that may be or have been instituted related to the merger agreement, which may result in significant costs of defense, indemnification and liability; (iv) the possibility that competing offers or acquisition proposals for Chuy's will be made; (v) the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the merger; (vi) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; (vii) the effects of disruption from the transactions on Chuy's business and the fact that the announcement and pendency of the transactions may make it more difficult to establish or maintain relationships with employees and business partners; (viii) Darden's ability to realize the synergies contemplated by the proposed transaction and integrate the business of Chuy's; (ix) changes in economic conditions, including inflation, increasing interest rates, higher unemployment, slowing growth or recession; (x) reductions in consumer discretionary income and general competition in the restaurant industry; (xi) the effect of shortages or increases in labor costs, state or local government regulations related to the sale or preparation of food, the sale of alcoholic beverages and the opening of new restaurants; (xii) risks in the markets where Chuy's restaurants are located; and (xiii) economic, regulatory and other limitations on Chuy's ability to pursue new restaurant openings and other organic growth opportunities. The foregoing factors should be read in conjunction with the risks and cautionary statements discussed or identified in Darden's and Chuy's respective public filings with the
Darden Contacts:
(Analysts)
Chuy's Contact:
Non-GAAP Information
The information in this press release includes financial information determined by methods other than in accordance with
Darden calculates Chuy's Transaction Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, Adjusted Revenue and Restaurant-Level EBITDA Margin consistent with Darden's methodologies to improve Darden's ability to assess Chuy's performance in relation to its own. Darden and Chuy's believe that the presentation of Transaction Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, Adjusted Revenue and Restaurant-Level EBITDA Margin for Chuy's provides useful supplemental information that is essential to a proper understanding of the operating results of Chuy's business. These non-GAAP performance measures should not be viewed as substitutes for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be similarly named and presented by other companies, including Chuy's. Reconciliations of Transaction Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, Adjusted Revenue and Restaurant-Level EBITDA Margin are included below.
($ Millions) |
52 Weeks Ended |
|
52 Weeks Ended |
|
Thirteen Weeks Ended |
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2024 |
March 26, 2023 |
|
Net Income |
|
|
|
|
|
|
Interest income, net |
(3.1) |
|
(3.3) |
|
(0.6) |
(0.8) |
Income tax expense |
5.3 |
|
5.4 |
|
0.8 |
0.9 |
Depreciation and amortization expenses |
21.4 |
|
21.1 |
|
5.5 |
5.2 |
EBITDA |
|
|
|
|
|
|
Loss on impairment and restaurant closure costs |
5.0 |
|
5.0 |
|
0.4 |
0.4 |
Pre-Opening Expenses |
2.2 |
|
2.0 |
|
0.7 |
0.5 |
53rd Week Adjustment1 |
(2.3) |
|
(2.3) |
|
- |
- |
Non-GAAP Transaction Adjusted EBITDA |
|
|
|
|
|
|
General and administrative costs |
30.7 |
|
31.4 |
|
7.1 |
7.8 |
53rd Week Adjustment1 |
(0.4) |
|
(0.4) |
|
- |
- |
Adjusted Restaurant-Level EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
53rd Week Adjustment1 |
(8.7) |
|
(8.7) |
|
- |
- |
Adjusted Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant- Level EBITDA Margin |
19.8 % |
|
20.0 % |
|
18.8 % |
19.7 % |
|
1 Represents the adjustment for the 53rd week in Chuy's fiscal 2023. |
View original content:https://www.prnewswire.com/news-releases/darden-restaurants-to-acquire-chuys-holdings-inc-in-approximately-605-million-transaction-302199675.html
SOURCE