Chuy’s Holdings, Inc. (NASDAQ: CHUY) stock is seeing a sharp increase in value after a takeover bid was made public. CHUY stock has increased 47.96% as of the most recent check today, hitting a per share value of $37.39. The significant rise may be ascribed to the definitive agreement that Chuy’s and Darden Restaurants, Inc. jointly announced.
The Agreement
Darden will make an all-cash acquisition of Chuy’s outstanding shares. Founded in 1982, Chuy’s is a full-service restaurant company with locations in Austin, Texas. Its menu features authentic, scratch-made Tex-Mex cuisine. Chuy’s restaurants are known for their delicious, freshly prepared food, which is always served in a vibrant, varied, and enjoyable setting. Every locale has a distinct, “unchained” aesthetic.
Chuy’s operated 101 locations in 15 states as of July 16, 2024. For the year ended March 31, 2024, CHUY brought in over $450 million in overall revenue, with an average yearly restaurant volume of $4.5 million. Chuy’s success and development potential make it stand out in the full-service eating business. The brand is a wonderful fit for Darden’s portfolio expansion requirements.
Financial Details and Future Outlook
Darden has agreed to purchase Chuy’s for $37.50 in cash per share, for a total enterprise value of around $605 million. This purchase price represents a 40% premium over the 60-day volume-weighted average price as well as a 10.3x implied multiple of Chuy’s Transaction Adjusted EBITDA for the most recent twelve months ending March 31, 2024.
The official merger agreement includes a 30-day “go-shop” period that allows Chuy’s to solicit further proposals from interested parties. Darden has attested to having the liquidity to close the deal with cash alone and have a healthy balance sheet.
The firm plans to keep allocating cash primarily to operating its current restaurants, growing its brand-new locations, and giving shareholders their money back through dividend payments and well-timed share repurchases.
