Ruth\'s Hospitality Group (RUTH) to Sell Mitchell's-Branded Assets

Ruth\'s Hospitality Group (NASDAQ: RUTH) announced that it has entered into a definitive agreement to sell substantially all of the assets related to its Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse businesses to Landry’s, Inc.

Under the terms of the agreement, the Company will receive $10 million for its 21 Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse restaurants. The transaction is expected to close within 75 days, subject to the satisfaction of customary closing conditions. North Point Advisors served as exclusive financial advisor to Ruth’s Hospitality Group.

Excluding customary transaction-related costs, this transaction is not expected to have a material impact on the Company’s current fiscal 2014 guidance. This guidance assumes the results of operations from the Mitchell’s Restaurants’ will be reclassified to discontinued operations during the fourth quarter of fiscal 2014. The Company intends to file revised financial statements with the Securities and Exchange Commission for the stand-alone Ruth’s Chris Steak House business within four days of the closing of the transaction. Consequently, previously issued financial statements will be revised to reclassify the Mitchell’s Restaurants’ operating results, including impairment loss, as discontinued operations.

In conjunction with the sale, Ruth’s Hospitality Group also announced that its Board of Directors has approved a new share repurchase program under which it authorized the Company to repurchase up to $50 million of its common shares outstanding. The new authorization replaces the Company’s previous share repurchase program announced in May 2013, which has been terminated. Share repurchases may be made from time to time in the open market, through negotiated transactions or otherwise (including, without limitation, the use of Rule 10b5-1 plans), depending on share price, market conditions and other factors. The Company intends to continue to conduct any open market share repurchase activities in compliance with the safe harbor provisions of Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of its common shares.

“While the Mitchell’s restaurants continue to be profitable and generate positive cash flows, the sale of these restaurants will enable us to direct all of our resources towards the continued growth and expansion of our flagship Ruth’s Chris Steak House brand,” said Michael P. O’Donnell, Chairman, President and Chief Executive Officer of Ruth’s Hospitality Group, Inc. “We are confident that Mitchell’s will complement Landry’s existing seafood restaurant portfolio and are very proud of the effort put forth by all our hardworking “aFISHionado” teammates.”

“We remain pleased with our recent success in developing new restaurants, buying back shares, increasing our dividend and focusing on shareholder returns,” O’Donnell added. “We have opened three Company-owned restaurants in 2014, and two more are under construction and expected to open in the first half of 2015. Additionally, we expect that our franchise partners will have opened three new restaurants in 2014 and two more in the first half of 2015. Once these remaining restaurants are opened, ten new locations will have been opened in the preceding 18-month period.”

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