Jack in the Box to acquire Del Taco in a deal valued at approximately $575 million.
Jack in the Box Inc. is buying the second-largest Mexican quick-serve chain in the United States.
The San Diego-based burger chain has entered into an agreement to acquire Del Taco for $12.51 per share in cash in a value of approximately $575 million. The purchase is expected to close in the first three months of 2022.
Founded in 1964, Del Taco operates some 600 restaurants, with 99% of its locations featuring a drive-thru, helping to achieve strong off-premise sales and a diversified daypart mix. Jack in the Box operates more than 2,200 units. The combined company will have more than 2,800 restaurants spanning 25 states with similar guest profiles, menu offerings and company cultures.
“We are thrilled to welcome Del Taco, a beloved brand and proven regional winner, to the Jack in the Box family,” said Darin Harris, CEO of Jack in the Box. “This is a natural combination of two like-minded, challenger brands with outstanding growth opportunities. Together, Jack in the Box and Del Taco will benefit from a stronger financial model, gaining greater scale to invest in digital and technology capabilities, and unit growth for both brands. This acquisition fits squarely in our strategic pillars and helps us create new opportunities for the franchisees, team members and guests of both brands.”
In October, said it has awarded seven development agreements to open 47 new restaurants. In total, Jack in the Box has awarded 23 development agreements in its current fiscal year to build 111 stores during the next several years.
The transaction is expected to reinforce unit growth plans for both brands. Jack in the Box said it will benefit from Del Taco’s strong operations, construction, and development expertise to drive more efficient expansion supporting its long-term objective of 4% annual unit growth by 2025. And by leveraging Jack in the Box’s broader footprint, re-franchising experience, and digital capabilities, the combined company expects to drive energized growth at both brands in existing and new markets.
“We are excited to have found a partner in Jack in the Box that shares our vision for the future and has the QSR expertise to further accelerate Del Taco’s growth,” said John D. Cappasola, Jr., president and CEO of Del Taco. “In recent years, we have uniquely positioned Del Taco as a leader in the growing Mexican QSR category, expanded our digital capabilities to enhance consumer convenience and focused on growing the brand through franchising, resulting in eight consecutive years of franchise same-store sales growth and an accelerating new unit pipeline.”
Jack in the Box forecasts that the acquisition will grow its earnings per share by mid-single digits in the first year, excluding transaction expenses. By the end of fiscal year 2023, the company predicts it will realize about $15 million in benefits from the deal, including supply chain savings and knowledge-sharing initiatives.