Darden announced Wednesday it has agreed to buy Ruth’s Chris Steak House for $715 million, after hints that an M&A move was coming. 

The company plans to acquire all of Ruth’s outstanding shares for $21.50 per share, which is a 34 percent premium to the chain’s May 2 closing price, in an all-cash transaction. The purchase price is a 9.4x implied multiple of Ruth’s 2022 transaction adjusted EBITDA. The transaction, approved unanimously by the boards of Darden and Ruth’s, is expected to close in June. 

The brand will join a Darden group that includes Olive Garden, LongHorn Steakhouse, Cheddars Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s, and The Capital Burger. Ruth’s will be Darden’s fourth-biggest chain in terms of footprint, following Olive Garden, LongHorn, and Cheddars. When the concept officially joins, the portfolio will exceed 2,000 restaurants systemwide. 

“Ruth’s Chris is a strong and distinctive brand in the fine dining segment with an impressive history of delivering elevated dining experiences to their loyal guests,” Darden president and CEO Rick Cardenas said in a statement. “It fits the criteria we have for adding a brand to our portfolio and supports our winning strategy. Ruth’s Chris is a great complement to our portfolio of brands, and I’m pleased to welcome their nearly 5,000 team members to Darden.”

Ruth’s has 154 locations systemwide, including 80 company-owned stores and 74 franchised restaurants. In 2022, the steakhouse generated more than $860 million in systemwide sales, more than $500 million in revenue, and $6.2 million in AUV. One of the chain’s biggest accomplishments in 2022 was the development of a proprietary demand forecasting platform that integrates with Ruth’s labor management system, creating more efficient schedules. The efforts have resulted in a 10 percent improvement in hours per entrée. This year, the chain plans to roll out new hospitality training and standards over the next 12 to 18 months, including a new uniform, table presentation, and smallwares. A refreshed menu and new bar program is also coming.

Cheryl Henry will remain as president of Ruth’s and will report directly to Cardenas. 

“We are excited about the opportunity to join the Darden family,” Henry said in a statement. “Our strategy and operating philosophy aligns well with Darden, and we have a strong cultural fit that should ensure a smooth transition. This transaction will also provide more opportunities for our team members to develop in their careers as we continue to grow our 57-year-old iconic brand.”

Darden made it known that M&A was always a possibility. In June 2022, Cardenas told investors Darden’s biggest competitive advantage is scale, and that one way to build that is via acquisition. He repeated the same sentiments in January at the annual ICR Conference. 

He also noted that food category didn’t matter, which is why bringing in an additional steakhouse isn’t an issue. 

“We believe that we are good at building brands and keeping brands distinctive whether they compete against each other or not,” Cardenas said earlier this year. “Our brands compete against each other every day. This is a variety of categories. So we’ll continue to look and it just takes a willing seller to sell for the price. We’re willing to pay.”

In a 10-year stretch, Darden spent more than $2.5 billion to grow through M&A. In 2007, the company agreed to buy Rare Hospitality, the parent of LongHorn Steakhouse and Capital Grille, for roughly $1.19 billion. It purchased fine dining concept Eddie V’s for $59 million in 2011, Yard House for $585 million in 2012, and Cheddar’s Scratch Kitchen for $780 million in 2017. Darden’s remaining brands, Olive Garden, Bahama Breeze, and Seasons 52, were original creations.

Total acquisition and integration-related expenses are expected to be approximately $55 to $60 million. Darden expects pre-tax synergies of between $5 and $10 million within the first year, and between $15 and $20 million in the second year.

Hunton Andrews Kurth LLP is acting as legal adviser to Darden. Jefferies LLC is acting as exclusive financial advisor, and Kirkland & Ellis LLP is acting as legal advisor to Ruth’s.