Jack in the Box will Acquire Del Taco In a $575 Million Deal

Jack in the Box is acquiring Del Taco for $575 million, three years after leaving Qdoba Mexican Eats.

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Jack in the Box, Inc. is a corporation based in the United States. JACK just agreed to purchase Del Taco Restaurants, Inc. TACO is the country's second-largest Mexican quick-service restaurant chain by the number of locations. The decision is in line with the company's goal of growing its consumer base. The acquisition, which is likely to settle early next year, builds on Jack in the Box's taco popularity.

Del Taco has agreed to be acquired by Jack in the Box for $12.51 per share in cash, representing a 66 percent premium over the closing price on December 3. The total acquisition value, including current debt, is $575 million. The transaction is set to close in the first quarter of 2022.

Jack in the Box sells a diverse range of foods, from burgers to egg rolls, but its tacos have earned a name for themselves, and despite varied reviews, they've long been the chain's best-selling item.

Del Taco's Purchase: A Strategic Move to Increase Customer Base

Del Taco is the polar opposite: it specializes in tacos, quesadillas, and another American-style Mexican fare, but also sells American fare such as burgers.

According to the companies, the California-based brands will have over 2,800 restaurants in 25 states, putting them in a stronger position to compete with large quick-service eateries.

Jack in the Box was established in San Diego and is still headquartered there. The headquarters of Del Taco is located in Orange County.

During a Monday analyst call regarding the deal, Jack in the Box CEO Darin Harris stated, "Joining forces will bring extra resources to drive innovation to develop more distinctive, inventive menu items and excellent guest experiences." "This will enable Jack and Del Taco to better engage with their current customers while also reaching out to new ones."

Del Taco's investors think this is a smart strategy. On the news, the company's stock rose over 66 percent to around $12.5. On the other side, Jack in the Box's stock dropped almost 4% to $80.5 per share.

After purchasing the fast-casual Mexican chain Qdoba in 2003, Jack in the Box declared its intention to sell it in 2017 after the brand's sales began to decline, and the deal was completed the following year.

Del Taco will be a better fit, according to Harris, because it appeals to customers who already shop at Jack in the Box, operates in similar markets, and has a sizable drive-thru business: 99 percent of Del Taco outlets have a drive-thru, compared to around 90 percent of Jack in the Box locations.

According to Harris, this is a "major distinction" from Qdoba, which doesn't have many drive-thrus.

Jack is one of several chain restaurants that has recently expanded its business. Restaurant Brands International, which owns Burger King, Popeyes, and Tim Horton's, announced the purchase of Firehouse Subs in November. FAT Brands, the parent company of Johnny Rockets and Fatburger, has announced the acquisition of Native Grill & Wings, while BurgerFi has acquired Anthony's Coal Fired Pizza & Wings from L Catterton.

Jack in the Box is a hamburger restaurant franchise established in California, however, its menu is diverse. Tacos, egg rolls, and teriyaki bowls are also available.

Qdoba, another Mexican restaurant chain, was previously purchased and sold by the company.