(Bloomberg) -- Darden Restaurants Inc., the owner of chains including Olive Garden and LongHorn Steakhouse, tapped the US high-grade market for $750 million to finance its planned acquisition of Tex-Mex chain Chuy’s.
Darden on Monday sold notes in two parts, according to a person with knowledge of the matter. The longest portion of the offering, a five-year bond, yields 1.02 percentage point above Treasuries after initial discussions of around 1.3 percentage point, said the person, who asked not to be identified as the details are private.
The firm didn’t respond to a request for comment.
Darden and Chuy’s announced the $605 million acquisition in July. The transaction is expected to close in mid-October subject to certain conditions, the company said in its earnings call.
Darden may also use proceeds from its new bond sale for purposes including other acquisitions or the repayment of short-term debt, the person said. Darden’s bond spreads are at risk of widening on the purchase, as it’s still digesting its 2023 acquisition of Ruth’s Hospitality, Bloomberg Intelligence analyst Jody Lurie wrote in a note.
“Darden employs a more conservative financial policy than its rated casual dining peers,” S&P Global Ratings said in a statement. “We expect Darden will sustain leverage of approximately 3x as its stable profitability offsets modest lease growth.”
The company is among three firms selling US high-grade bonds Monday.
(Updates with pricing details)
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