U.S. News

Darden to Buy Rare Hospitality for $1.19 Billion

Associated Press

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.

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Darden Deal

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.