DRI - Food stock Ruth's Hospitality opened 35% up today: what happened?

2023-05-03 11:25:23 ET

Shares of Ruth’s Hospitality Group Inc ( NASDAQ: RUTH ) opened nearly 35% up on Wednesday after Darden Restaurants Inc ( NYSE: DRI ) said it will buy the owner of Ruth’s Chris Steak Houses for $715 million.

What’s in it for Darden Restaurants?

For shareholders of the Nasdaq-listed firm, the all-cash deal translates to $21.50 per share – a 34% premium on the price at which the stock closed yesterday.

Darden expects this acquisition to deliver up to 12 cents a share of boost to its earnings by fiscal 2024. Its CEO Rick Cardenas said in the press release :

Ruth’s fits the criteria we have for adding a brand to our portfolio and supports our winning strategy. It’s a great complement to our portfolio of brands.

The stock market news arrives more than a month after Darden Restaurants reported market-beating results for its fiscal third quarter.

Cheryl Henry will continue as President

The transaction will complete in June as long as it meets the customary closing conditions.

Ruth’s board has already approved the deal and recommended that stockholders do the same. In the press release , its CEO and President Cheryl Henry said:

Our strategy and operating philosophy align well with Darden. This transaction will also provide more opportunities for our team members to develop in their careers.

She will continue as the President and will report to Rick Cardenas once the transaction is complete. Food stock Darden Restaurants is marginally in the red today following the announcement.

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