Jack In The Box To Buy Del Taco For $575M

Jack in the Box is buying Del Taco, the second-largest Mexican fast-food chain in the US, in a deal valued at roughly $575 million, reported CNBC. The burger chain will pay $12.51 per share in cash for the acquisition. Del Taco stock closed Friday at $7.53 per share. Jack in the Box plans to finance the acquisition by issuing additional securitization notes.

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

Shares of Jack in the Box were up less than 1% in premarket trading. Jack in the Box’s stock has fallen 9% this year, giving it a market value of $1.82 billion. Del Taco shares surged nearly 65% to $12.36 per share in premarket trading, bringing its market value from $274 million to $450 million.

Del Taco has a footprint of roughly 600 restaurants across 16 states, making it the second-largest Mexican fast-food chain by number of restaurants behind Yum Brands’ Taco Bell. In its third quarter, it earned 11 cents per share, after adjustments, on revenue of $124.3 million.

The combined company will have more than 2,800 locations across 25 states. The purchase is expected to close in the first three months of 2.

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.