Darden Restaurants (DRI) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition adds a leading, differentiated full-service Tex-Mex brand, enabling entry into the fast-growing Mexican dining category and diversifying the portfolio.

• Chuy's offers strong guest appeal, high-quality made-from-scratch food, and a fun atmosphere, with attractive unit economics and significant growth runway.

• The deal aligns with long-term strategic goals to expand in high-growth segments and strengthen competitive advantages.

• Shared operating philosophies and team culture are expected to ease integration.

Financial terms and conditions

• All-cash transaction valued at $605 million, or $37.50 per share, representing a 40% premium to Chuy's 60-day VWAP.

• Purchase multiple of 10.3x trailing 12-month adjusted EBITDA as of March 2024; synergy-adjusted multiple is 8.2x.

• Transaction expected to close in Darden's fiscal second quarter after a 30-day go-shop period, subject to customary closing conditions and regulatory approvals.

• Sufficient liquidity and debt capacity to maintain investment-grade credit profile; leverage expected at the lower end of 2-2.5x target range.

• Pre-tax transaction and integration expenses estimated at $50–$55 million.

Synergies and expected cost savings

• Net run-rate pre-tax synergies of $15 million anticipated by end of fiscal 2026, mainly from supply chain and G&A savings.

• Synergy savings expected to be 4%–5% of sales, consistent with prior acquisitions.

• Synergies expected to benefit all brands in the portfolio, not just the acquired brand.