Acquisition of Chuy’s

6 Months Ended

Nov. 24, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

On October 11, 2024, we acquired 100 percent of the equity interest of Chuy’s Holdings, Inc (Chuy’s Holdings) in an all-cash transaction of $649.1 million in total consideration, net of $35.3 million of cash on Chuy’s Holdings balance sheet at closing. We financed the acquisition with a portion of the proceeds from the issuance of a $400.0 million aggregate principal amount of 4.350 percent senior notes due 2027 (2027 Notes) and a $350.0 million aggregate principal amount of 4.550 percent senior notes due 2029 (2029 Notes), which were issued on October 3, 2024. The 2027 Notes will mature on October 15, 2027 and the 2029 Notes will mature on October 15, 2029. Interest on the Notes will be paid semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2025, to holders of record on the preceding March 31 or September 30, as the case may be.

The acquired operations of Chuy’s Holdings included 103 restaurants. The results of Chuy’s operations are included in our consolidated financial statements from the date of acquisition.

The assets and liabilities of Chuy’s Holdings were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-party valuations, the fair value of these assets, including land, buildings and equipment, intangible assets, and income tax assets and liabilities. The fair values set forth below are based on preliminary valuations and are subject to adjustment as additional information is obtained. When the valuation process is completed, adjustments to goodwill may result.

The preliminary allocation of the purchase price is as follows:


	Balances at
(in millions)	October 11, 2024
Cash and cash equivalents	$	35.3
Other current assets	10.9
Land, buildings and equipment	204.3
Operating lease right-of-use assets	337.7
Trademark	198.4
Other assets	6.2
Goodwill	262.9
Total assets acquired	$	1,055.7
Current liabilities	35.2
Deferred income taxes	43.0
Operating lease liabilities - non-current	328.4
Other liabilities	—
Total liabilities assumed	$	406.6
Net assets acquired	$	649.1

The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill in the amount of $262.9 million. The portion of the purchase price attributable to goodwill represents benefits expected because of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The trademark has an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The trademark represents a highly respected brand with positive connotations, and we intend to cultivate and protect the use of this brand. Goodwill and indefinite-lived trademarks are not amortized but are reviewed annually for impairment or more frequently if indicators of impairment exist. Buildings and equipment will be depreciated over a period of 1-30 years.

As a result of the acquisition and related integration efforts, we incurred expenses of approximately $27.7 million and $29.2 million during the quarter and six months ended November 24, 2024, which are included in general and administrative expenses and interest expense in our consolidated statements of earnings. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of Chuy’s on our consolidated financial statements