Jack in the Box Inc. (JACK, Financial) is crediting a similarity in cultures, guest profiles, operating models and market opportunities for its just-announced acquisition of Del Taco, the nation’s second-largest Mexican quick-service restaurant chain by number of locations.
According to the announcement, Jack in the Box will acquire Del Taco for $12.51 per share in cash in a transaction valued at approximately $575 million, including existing debt. “While this price per share offers an attractive premium to Del Taco shareholders,” the announcement said, Jack in the Box estimates that the transaction values Del Taco at a synergy adjusted multiple of approximately 7.6 times trailing 12 months adjusted Ebitda.
Jack in the Box, based in San Diego, operates and franchises Jack in the Box restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam.
Jack in the Box and Del Taco will have more than 2,800 restaurants spanning 25 states with similar guest profiles, menu offerings and company cultures – “both priding themselves on serving guests with unique variety, quality, innovation and value,” the company said in a release. Together, the companies will create “a stronger QSR player with greater scale and the ability to enhance the guest experience while pursuing profitable growth.”
“We are thrilled to welcome Del Taco, a beloved brand and proven regional winner, to the Jack in the Box family,” Darin Harris, CEO of Jack in the Box, said. “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.”
The Mexican chain, Harris continued, has “a loyal, passionate guest base and a strong operating model, and we believe that we can leverage our infrastructure, experience refranchising, and development strategy to support Del Taco’s growth plans and expand Del Taco’s footprint. We can’t wait to welcome the Del Taco team members and franchisees to the Jack family!”
John D. Cappasola Jr., president and CEO of Del Taco, said in a release that he and his colleagues 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. 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.”
Founded in 1964, Del Taco serves more than 3 million guests each week at its approximately 600 restaurants across 16 states. Around 99% of Del Taco restaurants feature a drive-thru, helping to achieve strong off-premise sales and a diversified daypart mix.