Ruth's Hospitality Group shares surged 34% to $21.46 on Wednesday after the parent company of Ruth’s Chris Steak House agreed to be acquired by Darden Restaurants (NYSE:DRI) for $21.50 per share in cash, or a total consideration of about $715 million.
Darden, which owns the Olive Garden chain of restaurants, will add the Ruth’s Chris Steak House group to its fine-dining portfolio, which already includes The Capital Grille and Eddie V’s.
Darden has seen same-store sales growth of 11.7% in its fine-dining restaurants segment during its most recent quarter.
The Ruth’s Chris Steak House chain has more than 150 locations globally and generated $505.9 million in revenue in 2022.
Ruth's Hospitality Group reported same-store sales growth of 4.5% in its latest quarter.
Darden expects acquisition and integration expenses will cost the company between $55 million and $60 million, but also anticipates $5 million to $10 million in pretax synergies in the first year and an additional $15 million to $20 million in the second year, CNBC reported.
The company stated it has sufficient liquidity to complete the all-cash transaction without obtaining additional financing.
The deal is expected to close in June of this year.
Shares of Darden Restaurants (NYSE:DRI) eased 0.4% to $151.24 in late afternoon trading Wednesday, while gaining 8% year to date and 16% over the past 52 weeks.
Contact Sean at sean@proactiveinvestors.com