Darden Restaurants Inc. (DRI: Quote) Thursday agreed to acquire Yard House USA Inc. from private equity firm TSG Consumer Partners LLC for $585 million in cash.
Darden expects to complete the acquisition of Yard House early in second quarter. Yard House, which launched its first restaurant in 1996, currently has 39 restaurants across 13 states. Yard House offers contemporary American cuisine with a wide range of draft beers and other beverages.
Darden said the brand will become part of its Specialty Restaurant Group, which includes The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V's. Harald Herrmann, President and CEO of Yard House, will remain President of Yard House, and report to Gene Lee, President of Darden's Specialty Restaurant Group.
Darden Chief Executive Clarence Otis said, "With this addition, Darden's Specialty Restaurant Group will have nearly $1 billion in annual sales and be even better positioned to sustain annual sales growth of 15 to 20 percent for years to come."
The acquisition price of $585 million includes about $30 million of cash tax benefits that are expected to be realized by Darden in fiscal 2013 and fiscal 2014.
Including acquisition-related costs, Darden expects the deal to be dilutive to net earnings in fiscal 2013 by about $0.03 to $0.05 per share and accretive thereafter.
As a result of the transaction, the company expects fiscal year 2013 net earnings growth from continuing operations to be in a range of 5 to 9 percent and total sales growth of 9 to 10 percent.
Previously, Darden expected net earnings to grow in a range of 8 to 12 percent over fiscal 2012, on projected sales growth of 6 to 7 percent.
The company now expects to repurchase shares of about $50 million in 2013, down from the $200 million to $250 million indicated earlier.
DRI closed Thursday's trading at $50.20, down $0.18, on a volume of 2 million shares. The stock further lost $0.70 or 1.39% in after-hours trade.
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by RTT Staff Writer
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