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Red Lobster owner will buy Capital Grille parent

A Capital Grille chef (left) instructs broilers at the restaurant's Burlington location earlier this year. The restaurant's owner is set to be acquired in a $1.19 billion deal. A Capital Grille chef (left) instructs broilers at the restaurant's Burlington location earlier this year. The restaurant's owner is set to be acquired in a $1.19 billion deal. (Mark Wilson/globe staff/file)

The operator of the Olive Garden and Red Lobster restaurants agreed to acquire the owner of the upscale Capital Grille steakhouses for $1.19 billion.

Darden Restaurants Inc. will pay $38.15 a share for Rare Hospitality International Inc., which also operates the LongHorn Steakhouse chain. The price is 39 percent more than Atlanta-based Rare's closing price of $27.51 yesterday.

Rare, with annual sales of $1 billion, owns 287 LongHorn restaurants and 28 Capital Grilles, including three in Greater Boston.

Clarence Otis, Darden's chief executive, has been looking for an acquisition after deciding to exit its Smoky Bones Barbeque & Grill chain. Otis said this year that he would consider acquisitions of chains with about 100 stores.

Rare shares surged $9.49, or 34 percent, to $37 in trading after the close of the Nasdaq stock market. Shares of Darden rose 16 cents to $39.96 at 4:19 p.m. in New York Stock Exchange composite trading before the announcement.

Darden will finance the purchase through cash and loans. The deal is expected to be neutral to Darden's earnings in the year ending in May, excluding one-time costs.

Darden and Rare's boards both have already approved the deal. The tender offer is expected to close in October.

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