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By Richard Clough | Bloomberg
Jack in the Box has agreed to buy Lake Forest-based Del Taco Restaurants, marrying the offbeat chain with a fast-food competitor also popular with late-night diners.
The San Diego burger chain will pay $12.51 a share in cash for Del Taco, a Mexican-food brand concentrated largely in the Southwest, representing a 66% premium over the closing price on Dec. 3. The total transaction is valued at $575 million, including existing debt, according to a statement Monday.
The deal expands the reach of two chains toiling largely in the shadows of larger rivals such as McDonald’s and Yum! Brands’ Taco Bell. Jack in the Box, which has embraced an outsider image and offered quirky promotions including a cannabis-themed $4.20 meal, already offers cheap tacos on its menu.
“This is a natural combination of two like-minded, challenger brands with outstanding growth opportunities,” Darin Harris, Jack in the Box’s chief executive officer, said in the statement.
Del Taco shares soared 65% to $12.40 as of 8:35 a.m. before regular trading in New York. Jack in the Box was little changed with minimal premarket trades.
The deal is expected to close in the first quarter. Jack in the Box will finance the deal through the issuance of notes under an existing program. It has received a financing commitment provided by BofA Securities.
BofA Securities is serving as financial adviser to Jack in the Box and Gibson, Dunn & Crutcher LLP is serving as legal adviser. For Del Taco, Piper Sandler & Co. is serving as financial adviser and McDermott Will & Emery LLP is serving as legal adviser.
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