• Darden Restaurants is buying the parent company of Ruth's Chris Steak House for $715 million.
• Ruth's will join Darden's fine-dining portfolio, which already includes The Capital Grille and Eddie V's.
• The steakhouse has more than 150 locations worldwide and generated $505.9 million in revenue in 2022.

Darden Restaurants said Wednesday it is buying Ruth's Hospitality Group, the parent company of Ruth's Chris Steak House, for $715 million.

The deal values Ruth's at $21.50 per share in an all-cash transaction. The steakhouse has more than 150 locations worldwide and generated $505.9 million in revenue in 2022.

Ruth's shares spiked nearly 34% in premarket trading, after closing Tuesday at about $16 per share. Darden's stock was flat.

Ruth's will join Darden's fine-dining portfolio, which already includes The Capital Grille and Eddie V's. In Darden's most recent quarter, its fine-dining restaurants reported same-store sales growth of 11.7%. The segment's average weekly sales had more than doubled compared with pre-pandemic levels.

The steakhouse is Darden's first acquisition in six years. It bought Cheddar's Scratch Kitchen in 2017 for $780 million. CEO Rick Cardenas signaled in January that the company was looking to add a 10th chain to its portfolio, for the right price.

Darden plans to hold a conference call Thursday at 8:30 a.m. ET to discuss the deal.

The agreement breaks a drought for restaurant deal-making. Rising interest rates have made acquisitions more expensive.

On top of that, many restaurant giants such as Yum Brands and Restaurant Brands International have instead focused on turning around the laggards in their portfolios and expanding their newer chains. A turbulent stock market, inflation and concerns about a recession have also kept some restaurant chains from going public.

But one big deal is expected on the horizon: the upcoming sale of Subway. The sandwich chain is reportedly seeking at least $10 billion to end more than five decades of family ownership.

Darden's acquisition of Ruth's precedes the steakhouse's first-quarter earnings report, which is expected to be released before the bell Friday. The company said Wednesday it is canceling the conference call scheduled for that morning.

Last quarter, Ruth's reported same-store sales growth of 4.5%.

Darden expects that acquisition and integration expenses will cost the company between $55 million and $60 million. But it also anticipates $5 million to $10 million in pretax synergies in the first year and an additional $15 million to $20 million in the second year.

The deal is expected to close in June if customary closing conditions are met. Ruth's CEO Cheryl Henry will stay on as president of Ruth's Chris and report to Cardenas.

Ruth's Chris was founded in 1965 after Ruth Fertel bought Chris Steak House in New Orleans. The terms of the sale kept her from reusing the name at other locations, so she chose to name new locations Ruth's Chris Steak House. The company went public in 2005.

As of Tuesday's close, Darden's stock had risen nearly 10% this year, giving it a market value of $18.4 billion. Ruth's shares had increased 3% this year as of Tuesday, bringing its market value up to $525 million.