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July 12, 2012 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it has agreed to acquire Yard House
USA, Inc. for
$585 million in an all-cash transaction from private equity firm TSG Consumer Partners LLC, management and investors. The total transaction price of
$585 million includes approximately
$30 million of cash tax benefits that are expected to be realized by Darden in fiscal 2013 and fiscal 2014. The brand will become part of Darden's Specialty Restaurant Group, which includes The Capital Grille,
Bahama Breeze, Seasons 52 and Eddie V's. Including acquisition-related costs of approximately
seven to ten cents per share, offset partially by Yard House's earnings from operations, the transaction is expected to be dilutive to Darden's diluted net earnings per share in fiscal 2013 by approximately
three to five cents and accretive thereafter. Darden expects to complete the transaction early in its fiscal second quarter.
Yard House, which launched its first restaurant in 1996, offers contemporary American cuisine with chef-inspired recipes and ethnic flavors along with a wide range of draft beers and other beverages in a stylish and energetic setting. Created by restaurant veteran Steele Platt, along with partners
Harald Herrmann and
Carlito Jocson, the brand has grown to 39 restaurants across 13 states.
"Steele, Harald and Carlito have created one of the most differentiated and exciting restaurant brands in America today, with average unit volumes and returns on capital that are among the highest in the industry," said
Clarence Otis, Chairman and Chief Executive Officer of Darden. "Guests in a number of different markets are responding to Yard House's unique combination of handcrafted food, premium beers and other beverages, thoughtful soundtracks and elegantly designed restaurants. This combination has established Yard House as a great place for a wide range of occasions."
"This transaction offers a tremendous opportunity to begin the next chapter in Yard House's high growth evolution to become a national brand," said
Harald Herrmann, President and Chief Executive Officer of Yard House USA. "We're excited about the opportunity, and that we and our team members will become a part of one of the world's largest and most successful restaurant companies."
"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% for years to come," said Otis. "Now the Group will even more clearly stand with Olive Garden, Red Lobster and LongHorn Steakhouse as a major driver of our growth and value creation. The Specialty Restaurant Group is also significant because, in appealing to higher percentages of both younger and higher income guests, its brands round out Darden's overall guest base in very important ways."
Gene Lee, President of Darden's Specialty Restaurant Group added, "We are delighted to welcome Yard House and its talented team. Adding this wonderful brand should drive margin expansion as we realize the operating leverage that comes with increased scale and capture cost synergies. Beyond that, as Yard House continues national expansion, it will benefit from the considerable expertise we have both within the Specialty Restaurant Group and throughout the rest of Darden. In addition, Yard House's talented leadership team has meaningful expertise in many areas that we will take advantage of to broaden the guest experiences we provide at our other brands. Finally, the Darden and Yard House cultures mesh well, which we believe is the most critical success factor."
Darden has agreed to acquire Yard House USA, Inc. through an all-cash merger with a total purchase price of $585 million and expects to derive approximately $30 million of future cash tax benefits as a result of the acquisition.
Yard House currently operates 39 locations across 13 states and has strong growth potential. Average unit volumes are approximately $8.4 million.
Including acquisition-related costs of approximately seven to ten cents per share, offset partially by Yard House operating earnings, the transaction is expected to be dilutive to Darden's diluted net earnings per share in fiscal 2013 by approximately three to five cents. In subsequent fiscal years, the transaction is expected to be accretive to Darden's diluted net earnings per share and accretive to the Company's sales and earnings growth rates.
Yard House will reside within Darden's Specialty Restaurant Group, which includes The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V's.
Yard House's talented team of leaders are expected to join Darden and continue leading the day-to-day operation of Yard House. 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.
Completion of the transaction is subject to certain conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and satisfaction of other customary closing conditions.