Chuy's Holdings, Inc. (NASDAQ:CHUY), a Texas-based restaurant company, has been acquired by Darden Restaurants (NYSE:DRI), Inc., in a deal valued at approximately $660 million. The transaction, which was completed today, results in Chuy's becoming an indirect, wholly-owned subsidiary of Darden.
The completion of the merger follows the terms set out in the Agreement and Plan of Merger dated July 17, 2024. As a result, each share of Chuy's common stock has been converted into the right to receive $37.50 in cash, excluding shares held by Chuy's, Darden, or their respective affiliates, and those held by stockholders who properly exercised appraisal rights.
In addition, all outstanding restricted stock units of Chuy's were fully vested and exchanged for cash, equal to the number of shares of Chuy's common stock multiplied by the merger consideration.
Concurrent with the merger's closing, Chuy's terminated its Amended and Restated Credit Agreement with JPMorgan Chase (NYSE:JPM) Bank, N.A., as previously outlined in a Current Report on Form 8-K filed on September 28, 2023.
Furthermore, Chuy's notified the Nasdaq Global Select Market that the merger had been completed and requested the suspension of trading and delisting of Chuy's common stock from Nasdaq, as well as the deregistration of the common stock under the Securities Exchange Act of 1934.
The change in control of Chuy's was effected by the merger, with Darden financing the merger consideration through proceeds from two senior note offerings.
With the merger's completion, the former board of directors of Chuy's ceased their roles, and Anthony G. Morrow, previously the sole director of Merger Sub, became the sole director of Chuy's. Additionally, the Certificate of Incorporation and Bylaws of Chuy's were amended and restated to reflect the new ownership structure.
This article is based on a press release statement.
In other recent news, Chuy's Holdings has seen a downgrade from Jefferies due to concerns about its projected sales and traffic performance. Stifel and Piper Sandler also reduced their price targets for Chuy's following a mixed quarter. Despite these changes, Chuy's reported earnings per share of $0.42, surpassing both Stifel's and the consensus estimate of $0.36.
On the financial front, Chuy's recently reported Q1 2024 earnings, noting a slight decrease in revenue to $110.5 million. Despite this, the company's off-premise business grew to represent about 29% of total revenue.
Looking ahead, Chuy's plans to open 6-8 new restaurants in 2024 and expects to see improved trends in the second half of the year as new off-premise initiatives take hold and new menu items attract customers.
InvestingPro Insights
Following the acquisition of Chuy's Holdings, Inc. (NASDAQ:CHUY) by Darden Restaurants, Inc., it's worth noting some key financial metrics and insights from InvestingPro that shed light on Chuy's performance leading up to the merger.
Prior to the acquisition, Chuy's demonstrated strong financial health. According to InvestingPro data, the company had a market capitalization of $645.88 million and was profitable over the last twelve months. Chuy's revenue for the last twelve months as of Q2 2024 stood at $460.07 million, with a revenue growth of 4.02%.
An InvestingPro Tip highlights that management had been aggressively buying back shares, which often signals confidence in the company's future prospects. Additionally, Chuy's operated with a moderate level of debt and its liquid assets exceeded short-term obligations, indicating a solid financial position that likely made it an attractive acquisition target.
The acquisition price of $37.50 per share represents a premium over Chuy's previous closing price of $37.48. Interestingly, this aligns closely with the fair value of $37.5 based on analyst targets, as reported by InvestingPro.
For investors interested in deeper analysis, InvestingPro offers 11 additional tips for Chuy's, providing a more comprehensive view of the company's financial landscape prior to the acquisition.
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