Darden Restaurants to Acquire Ruth’s Hospitality Group for $715 Million

Olive Garden owner Darden Restaurants is buying Ruth's Hospitality Group, the parent company of Ruth's Chris Steak House, for $715 million. Ruth's, owner and operator of Ruth's Chris Steak House ("Ruth's Chris"), will complement Darden's portfolio of differentiated brands, which currently includes Olive Garden, LongHorn Steakhouse, Yard House, Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.

Darden said its balance sheet is strong enough to pursue the all-cash deal without new financing, despite an estimated $55-60 million in acquisition and integration costs.

The company will pay $21.50 per share, a 34% markup over yesterday's closing price, for Ruth's, which owns the 154-unit Ruth's Chris Steak House.

Darden's deal is likely the most significant restaurant space acquisition this year, as the prohibitive cost of raising capital has deterred other brands from pursuing buys.

The deal will add Ruth's units, which have a $6.2 million AUV at company-owned stores, to Darden's brand portfolio. Cheryl Henry will continue to lead Ruth's as brand president.

Although Darden owns other steakhouse brands, CEO Rick Cardenas said Ruth's was distinctive enough and had a sufficiently strong brand identity to make an excellent addition to the company's stable.

The deal is expected to close in June.