There is a sign outside of a restaurant.
Jack in the Box is buying Del Taco, the second-largest Mexican fast-food chain in the U.S., in a deal valued at $575 million.
The burger chain will pay $12.51 per share in cash. The stock price was $7.53 per share. Jack in the Box plans to finance the acquisition by issuing additional notes.
Jack in the Box's CEO said that the brands have outstanding growth opportunities. 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.
Jack in the Box's shares were up less than 1% before the market opened. Jack in the Box has a market value of over $1 billion. The company's market value has increased from $274 million to $450 million.
The second-largest Mexican fast-food chain by number of restaurants is Del Taco, which has over 600 restaurants in 16 states. It earned 11 cents per share in the third quarter, after adjusting, on revenue of $124.3 million.
The company will have more than 2,800 locations. The purchase is expected to close in the first quarter of 2022.
Jack in the Box expects its earnings per share to grow in the first year of the deal. The company expects to realize about 15 million in benefits from the deal by the end of fiscal year 2023.
