Chuy's Holdings acquired by Darden Restaurants

Darden Restaurants agreed on 17 July 2024 to acquire Chuy’s Holdings for 37.50 dollars per share in cash, at an enterprise value of $605m representing an EV/EBITDA multiple of 10x–18x on transaction adjusted earnings for the twelve months to March 2024, and a premium of 40% to the sixty-day volume-weighted average price. Completion was expected during the acquirer’s second fiscal quarter, subject to shareholder approval and antitrust clearance, and the merger agreement allowed thirty days during which alternative proposals could be solicited. Founded at Austin in 1982, Chuy’s Holdings operates full-service Tex-Mex restaurants, preparing its sauces, tortillas and dishes on the premises rather than from centrally produced components. Each establishment is fitted out individually rather than to a uniform specification. The chain comprised 101 restaurants across fifteen states, employed 7,400 people and generated revenue of $450m over the twelve months to March 2024, with average annual sales per restaurant of 4.5 million dollars. Tex-Mex occupied a category the acquirer did not serve, its existing brands covering Italian, steakhouse, seafood and American formats, and the purchase extended its portfolio into a cuisine with a following concentrated in the southern states where the chain operates. Scale alters the economics of a hundred-restaurant chain more than of a larger one, since purchasing, distribution and administrative functions are already established at the acquiring group and can absorb the additional volume, which is what produced the approximately 15 million dollars of expected annual pre-tax synergies against 50 to 55 million of acquisition and integration costs. The transaction was expected to leave earnings per share unchanged in the 2025 financial year, excluding those costs, and to add between twelve and fifteen cents in 2027. BofA Securities advised Darden Restaurants, with Hunton Andrews Kurth as legal counsel, while Piper Sandler advised Chuy’s Holdings, with Winston & Strawn as counsel.