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Darden to Buy Rare Hospitality for $1.19 Billion

Associated Press
Thursday, 16 Aug 2007 | 5:30 PM ET

Darden Restaurants, which operates the Olive Garden and Red Lobster restaurant chains, on Thursday said it agreed to buy Rare Hospitality International for some $1.19 billion.

Darden shares rose 16 cents Thursday to close at $39.96 on the New York Stock Exchange.

Darden said it would buy all of the company's outstanding shares in a tender offer with a price of $38.15 per share. The price is a 39 percent premium to Rare's closing price Thursday of $27.51. The deal value is based on 31.1 million shares outstanding.

Darden valued the deal at $1.4 billion, which includes outstanding debt and capital lease obligations.

Darden Deal
Darden pays $1.4B for RARE Hospitality, with Clarence Otis, Darden chairman/CEO; Tim Hayes, Ned Davis Research chief investment strategist and CNBC's Mark Haines

Rare owns and operates 317 restaurants, including 287 LongHorn Steakhouse restaurants and 28 Capital Grille restaurants.

Darden said it would finance the deal through cash, a new $1.2 billion senior interim credit facility and a $700 million senior revolving credit facility.

The restaurant operator said the acquisition would be "neutral" to its earnings in 2008, excluding one-time transaction and integration costs.

Darden and Rare's boards both have already approved the deal. The tender offer is expected to close in October.

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