<p>Darden Restaurants Inc., which operates the Olive Garden and Red Lobster restaurant chains, said Thursday it agreed to buy the owner of the LongHorn Steakhouse and Capital Grille chains for about $1.19 billion.</p><p>Darden, the world's biggest casual dining operator, said it would buy all Rare Hospitality Inc.'s outstanding shares for $38.15 per share in a tender offer. The price is a 39 percent premium to Rare's closing price Thursday of $27.51. The deal value is based on 31.1 million shares outstanding.</p><p>Clarence Otis, Darden's chairman and chief executive, had hinted recently that the Orlando-based company might buy another chain to boost growth. It already has plans to aggressively expand Olive Garden, its Italian eatery, after failing to get its Smokey Bones barbecue concept to catch on.</p><p>Darden shares rose 16 cents to close at $39.96. Rare Hospitality shares rose $9.49, or about 35 percent, to $37 in electronic after-hours trading.</p><p>Darden valued the deal at $1.4 billion, which includes outstanding debt and capital lease obligations.</p><p>Darden has stayed mostly steady despite tough times in dining, with high mortgage interest rates, skyrocketing gas prices and even increased competition from fast-food restaurants possibly crimping profits. For the fiscal year ended in June, Darden sales were up 4 percent to $5.57 billion.</p><p>Darden has 1,400 restaurants, with more than 600 Olive Gardens and 600 Red Lobsters. Atlanta-based Rare Hospitality has 317 restaurants, including 287 LongHorn Steakhouse restaurants and 28 Capital Grille restaurants.</p><p>"Rare Hospitality's two outstanding brands and the talented leadership and restaurant teams behind them enhance Darden's entire organization, but particularly our unit growth prospects," Otis said in a statement.</p><p>Darden said savings will be created by supply chain and purchasing integration, increased advertising effectiveness and consolidation of corporate and restaurant support infrastructure.</p><p>"Darden has the right culture and the resources to help LongHorn and Capital Grille prosper in an intensely competitive industry," said Philip J. Hickey Jr., chairman and chief executive of Rare Hospitality.</p><p>Hickey will stay on for a year as an adviser to Otis, who will retain his titles.</p><p>Darden said it would finance the deal through cash, a new $1.2 billion senior interim credit facility and a $700 million senior revolving credit facility.</p><p>The restaurant operator said the acquisition would be neutral to its earnings in 2008, excluding one-time transaction and integration costs.</p><p>Darden and Rare's boards both have already approved the deal. The tender offer is expected to close in October.</p><p>In May, Darden closed nearly half its 129 Smokey Bones locations and put the other 73 on the sales block because stores weren't selling enough. It also owns Bahama Breeze, a Caribbean-themed restaurant and bar, and Seasons 52, an upscale dining experiment.</p><p>___</p><p>On the Net:</p><p>HASH(0x2dec750)</p><p>HASH(0x2dee2dc)</p>
