Jack in a Box Buys Del Taco for $ 575 Million

Del Taco signage is located outside the Del Taco restaurant in Gardena, California.

Patrick T. Fallon | Bloomberg | Getty Images

Jack in the Box buys Del Taco, the second largest Mexican fast food chain in the United States, for an estimated $ 575 million deal.

The burger chain will pay $ 12.51 per share in cash. Del Taco shares closed Friday at $ 7.53 a share. Jack in the Box plans to finance the acquisition by issuing additional securitization bonds.

“It’s a natural combination of two like-minded people who challenge brands with outstanding growth opportunities,” said Jack in the Box CEO Darin Harris in a statement. “Together, Jack in a Box and Del Taco will benefit from a stronger financial model, increased investment in digital and technological capabilities, and growth in the division for both brands.”

Jack in the Box shares fell more than 3% in Monday afternoon trading. Jack in the Box shares are down more than 10% this year, bringing the company’s market value to $ 1.76 billion. Del Taco shares rose more than 65% in daytime trading at $ 12.54 a share. bringing its market value to over $ 450 million.

Del Taco has about 600 restaurants in 16 states, making it the second largest Mexican fast food chain in terms of number of restaurants after Yum Brands’ Taco Bell. In the third quarter, it earned 11 cents a share after adjusting for $ 124.3 million in revenue.

The combined company will have more than 2,800 offices in 25 states. The purchase is expected to be completed in the first three months of 2022.

Jack in the Box predicts earnings per share from the deal will rise to mid-single digits in the first year excluding transaction costs. The company predicts that by the end of fiscal 2023 it will generate about $ 15 million in profit from the deal, including supply chain savings and knowledge sharing initiatives.

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