Darden Restaurants Inc., which operates the Olive Garden and Red Lobster restaurant chains, said Thursday that it agreed to buy the owner of the LongHorn Steakhouse and Capital Grille chains for about $1.19 billion in cash and notes.
Darden, the world's biggest casual dining operator, said it would buy all Rare Hospitality International Inc. outstanding stock for $38.15 a share in a tender offer. The price is a 39% premium to Rare's closing price Thursday of $27.51.
Clarence Otis Jr., Darden's chief executive, had hinted recently that the Orlando, Fla.-based company might buy another chain to boost growth. It already has plans to aggressively expand Olive Garden after failing to get its Smokey Bones barbecue restaurants to catch on.
Darden shares rose 16 cents to $39.96. Rare Hospitality shares rose $9.49 to $37 in after-hours trading.
Darden has more than 600 Olive Gardens and 600 Red Lobsters among its 1,400 restaurants. Atlanta-based Rare Hospitality has 287 LongHorn Steakhouse and 28 Capital Grilles among its 317 eateries.
Darden and Rare's boards have already approved the deal. The tender offer is expected to close in October.