Darden Restaurants (DRI) has announced that it is acquiring Tex-Mex chain Chuy’s Holdings (CHUY) for $605 million U.S. in cash.
Darden is buying all outstanding shares of Chuy’s for $37.50 U.S. per share.
The per share purchase price represents a 48% premium to where Chuy’s stock had been trading prior to the acquisition being announced.
Once the deal is finalized, Chuy’s will join Darden’s restaurant portfolio that also includes Olive Garden and the LongHorn Steakhouse.
Chuy’s posted annual revenue of $450 million U.S. in its most recent fiscal year. The company, based in Austin, Texas, was founded in 1982 and currently has 101 restaurants in 15 states.
In a news release, Darden said that it was attracted to Chuy’s because the restaurant chain has both a strong track record and future growth potential.
The acquisition is supported by Chuy’s board of directors and is expected to close by year’s end.
The stock of Darden Restaurants has declined 13% in the last 12 months to trade at $147.35 U.S. per share.
Chuy’s stock had fallen 37% in the past year to trade at $25.27 U.S. a share. However, the stock is up 47% in premarket trading on news of the acquisition.
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