By Nichola Groom
CHICAGO (Reuters) - Darden Restaurants Inc. (DRI.N: Quote, Profile, Research, Stock Buzz), the parent of Olive Garden and Red Lobster, is looking more aggressively than ever at buying a rival restaurant chain as long as the brand can one day ring up $1 billion in annual sales, its president said on Tuesday.
The company is currently looking at chains of about 100 units and smaller, and Darden President and Chief Operating Officer Drew Madsen ruled out buying Applebee's International Inc. APPB.O or any other bar-and-grill chain.
"We're not really interested in the bar-and-grill space because we think there's plenty of sizable options there already," Madsen said at the Reuters Food Summit in Chicago.
When asked if Darden would be interested in buying Applebee's, which announced last month that it may put itself up for sale, Madsen said: "We're not looking at that."
Madsen declined to say when an acquisition might take place, but said Darden is looking for a brand that "could grow to be significantly bigger," to about 300 or 400 units and roughly $1 billion in sales.
The company is willing to take on more debt to fund such an acquisition, he added.
"Our leverage right now is about 50 percent debt to total capital," he said. "We could afford a higher leverage than we have today ... we could go meaningfully above 50."
For Darden, pursuing an acquisition of such scale marks a shift in strategy. The Orlando, Florida-based company had previously developed new chains on its own, and operates the smaller Smokey Bones, Bahama Breeze and Seasons 52 brands in addition to its flagship businesses. Continued...
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