8-KEarnings & ResultsMaterial AgreementsRegulation FD+1

DARDEN RESTAURANTS INC 8-K Report, Material Agreement (Mar 27, 2017)

Filed March 27, 2017For Securities:DRI

Summary

Darden Restaurants, Inc. (DRI) announced on March 27, 2017, a significant strategic move with the entry into an Agreement and Plan of Merger to acquire Cheddar’s Restaurant Holding Corp. for an aggregate consideration of $780 million in cash, on a cash-free/debt-free basis. This acquisition aims to bolster Darden's portfolio by adding Cheddar's Scratch Kitchen, described as a casual dining value leader. The deal is expected to close by the end of Darden's fiscal fourth quarter. In addition to the acquisition news, Darden also reported its fiscal 2017 third-quarter results and announced an increase to its full fiscal year earnings outlook. This dual announcement suggests positive operational performance alongside a proactive growth strategy, providing investors with both current financial health updates and a forward-looking acquisition plan designed to enhance market position and future earnings potential.

Key Highlights

  • 1Darden Restaurants entered into an Agreement and Plan of Merger to acquire Cheddar's Restaurant Holding Corp. for $780 million cash.
  • 2The acquisition is on a cash-free/debt-free basis with customary adjustments.
  • 3Cheddar's Scratch Kitchen is characterized as a casual dining value leader, aligning with Darden's strategy of differentiated brands.
  • 4The merger is subject to customary closing conditions, including regulatory approvals (Hart-Scott-Rodino) and Cheddar's shareholder approval.
  • 5The transaction is expected to be completed by the end of Darden's fiscal fourth quarter of 2017.
  • 6Darden also reported its Q3 fiscal 2017 earnings and raised its full-year earnings outlook.
  • 7A conference call is scheduled for March 28, 2017, to discuss the acquisition and Q3 results.

Frequently Asked Questions

Darden Restaurants is acquiring Cheddar's Scratch Kitchen to add a 'casual dining value leader' to its portfolio of differentiated brands. This move is expected to strengthen Darden's market position in the casual dining segment.

The aggregate consideration payable to Cheddar's equityholders is $780 million in cash, on a cash-free/debt-free basis. Additional payments may include $10 million for certain transaction-related tax attributes and reimbursement for capital expenditures on new restaurants under development.

The merger is expected to be completed before the end of Darden's fiscal fourth quarter of 2017.

Yes, key conditions include approval from Cheddar's shareholders, expiration or termination of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, accuracy of representations and warranties, compliance with obligations, and absence of any material adverse effect on Cheddar's.