Casual dining chain sells for approximately nine times its EBITDA.
In a deal valued at $2.1 billion, Golden Gate Capital has agreed to purchase Red Lobster from Darden Restaurants. The deal is expected to close in the first quarter of 2015.
Darden expects to receive net cash proceeds, after tax and transaction costs, of approximately $1.6 billion, of which approximately $1 billion will be used to retire outstanding debt. The remaining net proceeds of approximately $500 million to $600 million will be deployed for a new share repurchase program of up to $700 million in fiscal 2015. In December of 2013 Darden announced its plans to cast off Red Lobster as part of a larger initiative to improve shareholder value.
"Red Lobster is exactly the type of company in which we seek to invest given its great brand profile and strong management team," said Josh Olshansky, managing director at Golden Gate Capital. "We see significant opportunities for future growth by partnering with Kim Lopdrup and the management team to support the long-term success of Red Lobster."