Darden Restaurants in $715 million deal to acquire Ruth’s Chris Steak House
Darden Restaurants is expanding its fine-dining portfolio with its first acquisition in six years.
The parent company of Olive Garden, Yard House, LongHorn Steakhouse, The Capital Grille and other brands has agreed to acquire Ruth's Hospitality Group, owner and operator of Ruth's Chris Steak House, for $21.50 per share, in an all-cash deal valued at $715 million.
Founded in 1965 and famed for its signature “sizzling” steaks and extensive wine list, Ruth’s has 154 locations around the globe, including 80 company-owned or -operated restaurants and 74 franchised restaurants. It had total revenues of approximately $506 million in 2022. Same-store sales at company units increased 13.8% year-over-year.
Ruth’s will be part of Darden’s fine-dining portfolio, which includes The Capital Grille, Seasons 52 and Eddie V’s.
“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," Rick Cardenas, president and CEO, Darden. "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."
Darden expects that acquisition and integration expenses will cost between $55 million to $60 million. It anticipates $5 million to $10 million in pre-tax synergies in the first year and an additional $15 million to $20 million in the second year.
Cheryl Henry, Ruth’s president, CEO and chairperson, will continue to lead the company as president of Ruth's. She will report to Cardenas.
“Our strategy and operating philosophy aligns well with Darden, and we have a strong cultural fit that should ensure a smooth transition,” she stated. “This transaction will also provide more opportunities for our team members to develop in their careers as we continue to grow our 57-year-old iconic brand.”
The transaction, which has been unanimously approved by the boards of directors of both Darden and Ruth's, is expected to be completed in June.
Darden’s portfolio of brands include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's. The company’s last acquisition was in 2017, when it bought Cheddar’s Scratch Kitchen.
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.