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Jack in the Box to Buy Del Taco in $575 Million Fast Food Deal

Jack in the Box says it is buying Mexican fast-food chain Del Taco Restaurants in a deal worth around $575 million, adding tacos to its repertoire of burgers and fries.

Jack in the Box  (JACK) - Get Jack in the Box Inc. Report on Monday said it is buying Mexican fast-food chain Del Taco Restaurants  (TACO) - Get Del Taco Restaurants, Inc. Report in a deal worth around $575 million, adding tacos, nachos and other Mexican dishes to its repertoire of burgers, fries and milkshakes.

Under terms of the agreement, Del Taco shareholders will receive $12.51 a share in cash from Jack in the Box, which expects the deal to be “mid-single-digit accretive” to per-share earnings excluding transaction expenses in year one and “meaningfully accretive” starting in year two.

Shares of Del Taco at last check were up $4.94 at $12.46 after ending the tradingday Friday down 0.13% at $7.53.

 

Both Jack in the Box and Del Taco called the deal complimentary, saying it augments each other's geographic footprints, guest profiles and menu offerings. Combined, the companies will have more than 2,800 restaurants spanning 25 states.

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It also gives Jack in the Box a boost in the drive-through format. A full 99% of Del Taco's operations feature a via drive-thru, which consumers have taken a definitive shine to during the pandemic.  

“This is a natural combination of two like-minded, challenger brands with outstanding growth opportunities,” Jack in the Box CEO Darin Harris. “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.”

Jack in the Box last month reported fiscal fourth-quarter diluted earnings per share of $1.80. Same-store declined 4.4% in the fourth quarter, with decreases in traffic partially offset by increases in average check size. Franchise same-store sales grew 0.6%, with increases in average check; partially offset by a decrease in traffic.

Jack in the Box also recent announced the creation of a virtual restaurant with Uber Eats  (UBER) - Get Uber Technologies, Inc. Report and singer-songwriter Jason Derulo.

Shares of Jack in the Box were down 3.14% at $81.36 at last check.