- Brings Together Two Brands with Complementary Cultures, Guest
Profiles, Operating Models and Market Opportunities
- True QSR in the Attractive and Growing Mexican Category with a
Leading Brand
- Creates Critical Economies of Scale and Reinforces Unit Growth
Strategies for Both Brands Nationwide
- Financially Compelling Transaction with Meaningful Synergy
Opportunities is Expected to be Immediately Accretive to Jack in
the Box EPS
Jack in the Box Inc. (NASDAQ: JACK), one of the nation’s leading
QSR chains, and Del Taco Restaurants, Inc. (NASDAQ: TACO), the
nation’s second largest Mexican QSR chain by number of restaurants,
today announced that the companies have entered into a definitive
agreement pursuant to which Jack in the Box will acquire Del Taco
for $12.51 per share in cash in a transaction valued at
approximately $575 million, including existing debt. While this
price per share offers an attractive premium to Del Taco
shareholders, Jack in the Box estimates that the transaction values
Del Taco at a synergy adjusted multiple of approximately 7.6x
trailing twelve months Adjusted EBITDA.
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Founded in 1964, Del Taco serves more than three million guests
each week at its approximately 600 restaurants across 16 states.
99% of Del Taco restaurants feature a drive-thru, helping to
achieve strong off-premise sales and a diversified daypart mix.
Jack in the Box and Del Taco will have more than 2,800 restaurants
spanning 25 states with similar guest profiles, menu offerings and
company cultures – both priding themselves on serving guests with
unique variety, quality, innovation and value. Together, the
companies will create a stronger QSR player with greater scale and
the ability to enhance the guest experience while pursuing
profitable growth.
“We are thrilled to welcome Del Taco, a beloved brand and proven
regional winner, to the Jack in the Box family,” said Darin Harris,
CEO of Jack in the Box. “This is a natural combination of two
like-minded, challenger brands with outstanding growth
opportunities. 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. This acquisition fits squarely in our strategic pillars and
helps us create new opportunities for the franchisees, team members
and guests of both brands.”
Mr. Harris continued, “Del Taco has a loyal, passionate guest
base and a strong operating model, and we believe that we can
leverage our infrastructure, experience refranchising, and
development strategy to support Del Taco’s growth plans and expand
Del Taco’s footprint. We can’t wait to welcome the Del Taco team
members and franchisees to the Jack family!”
David Beshay, a Jack in the Box franchisee and operator of 210+
restaurants, added, "I couldn’t be happier about the opportunity
that this transaction offers to the franchisees of these two
amazing brands. I believe the Del Taco brand will fit hand in glove
with ours, and further enhance the strong franchise and
guest-focused culture we have worked so hard to develop at Jack in
the Box. We are excited about the potential to open Del Taco
restaurants, helping the company expand these two beloved
brands."
John D. Cappasola, Jr., President and CEO of Del Taco, said, “We
are excited to have found a partner in Jack in the Box that shares
our vision for the future and has the QSR expertise to further
accelerate Del Taco’s growth. In recent years, we have uniquely
positioned Del Taco as a leader in the growing Mexican QSR
category, expanded our digital capabilities to enhance consumer
convenience and focused on growing the brand through franchising,
resulting in eight consecutive years of franchise same store sales
growth and an accelerating new unit pipeline.”
Mr. Cappasola, Jr. continued, “We expect this transaction will
provide Del Taco with the scale, complementary capabilities and
opportunity to become even stronger partners to our franchisees and
support their ability to drive substantial growth in our core and
emerging markets. On behalf of Del Taco Restaurants, Inc. Board of
Directors, we’re confident the agreement delivers immediate value
to Del Taco shareholders and will greatly benefit our brand, team
members, franchisees and loyal guests for many years to come.”
Brent Veach, a Del Taco franchisee and operator of 50+
restaurants, shared, “Del Taco and Jack in the Box are two iconic
brands that both represent a tremendous business opportunity for
existing and new franchisees. I am excited how this new larger
organization can provide operating cost synergies and further
accelerate franchise growth through enhanced support, additional
resources and shared real estate knowledge. We are excited to join
the Jack in the Box family and assist in growing both amazing
brands.”
Compelling Strategic and Financial Benefits
The transaction is expected to:
- Deliver Immediate Earnings Accretion with Significant
Upside. Jack in the Box expects the transaction to be
mid-single-digit accretive to earnings per share excluding
transaction expenses in year one and meaningfully accretive
beginning in year two once full synergizes are realized.
- Create a Stronger QSR Player with Enhanced Scale. This
transaction combines two challenger brands with complementary
geographic footprints, guest profiles and menu offerings to create
a scaled QSR player with a stronger financial model to drive growth
and enhanced profitability. Jack in the Box and Del Taco will also
benefit from sharing best practices and the opportunity to
strengthen guest loyalty and reach new guests. As a combined QSR
player, Jack in the Box and Del Taco plan to expand their footprint
and continue to drive innovation at both brands to create more
unique, innovative menus and exceptional guest experiences.
- True QSR in the Expanding Mexican Category with a Track
Record of Consistent Growth. The transaction allows Jack in the
Box to tap into the growing and attractive Mexican QSR category,
where Del Taco has been a leading brand with a track record of
consistent performance. By leveraging the combined scale of the
companies, we will be able to effectively target secular
demographic trends underpinning the category.
- Reinforce Unit Growth Plans for Both Brands. By
leveraging Jack in the Box and Del Taco’s unique strengths and
their shared approach to building out markets, Jack in the Box will
be able to support growth plans for both brands. Jack in the Box
will benefit from Del Taco’s strong operations, construction, and
development expertise to drive more efficient expansion supporting
its long-term objective of 4% annual unit growth by 2025. By
leveraging Jack in the Box’s broader footprint, re-franchising
experience, and digital capabilities, the combined company expects
to drive energized growth at both brands in existing and new
markets.
- Create Substantial Opportunities for Franchisee Expansion
and Unit Level Economics. The transaction brings together two
exceptional franchisee bases and creates an enhanced platform for
franchisee expansion and growth by leveraging the combined
company’s scale, technology and digital capabilities. Both brands’
franchisees will benefit from economies of scale in supply chain
and more diverse opportunities to expand their businesses and drive
enhanced profitability. The transaction will enable both brands to
provide stronger support to franchisees with a broader set of
resources to help them optimize and grow their businesses.
- Build a Stronger, More Flexible Financial Model. The
transaction will create a stronger combined organization, with
increased size and scale, and the financial resources to pursue a
wider set of opportunities for profitable growth. Jack in the Box
expects that the combined organization will also benefit from a
more efficient capital structure. Jack in the Box expects to
maintain a leverage ratio within its target range of 4.0x to 5.5x
total debt to Adjusted EBITDA and an investment grade credit
rating.
- Drive Meaningful Synergies. Jack in the Box expects the
combined company to realize run-rate strategic and cost synergies
of approximately $15 million by the end of fiscal year 2023, with
approximately half of the synergies achieved in the first year.
Jack in the Box expects to achieve these synergies largely through
procurement and supply chain savings, technology and digital
efficiencies and other financial benefits, as well as
knowledge-sharing initiatives.
Financing and Path to Completion
Jack in the Box intends to finance the acquisition through the
issuance of additional securitization notes from its existing
program with a financing commitment provided by BofA Securities,
Inc.
The transaction is expected to close in the first calendar
quarter of 2022 and is subject to customary closing conditions,
including receipt of Del Taco shareholder approval and regulatory
approvals.
Advisors
BofA Securities is serving as exclusive financial advisor and
Gibson, Dunn & Crutcher LLP is serving as legal advisor to Jack
in the Box. Piper Sandler & Co. is serving as exclusive
financial advisor and McDermott Will & Emery LLP is serving as
legal advisor to Del Taco.
Conference Call
Jack in the Box will host a conference call for analysts and
investors today, beginning at 5:30 a.m. PT (8:30 a.m. ET), to
discuss the transaction. The call will be webcast live via the
Investors section of the Jack in the Box company website at
http://investors.jackinthebox.com. A replay of the call will be
available through the Jack in the Box Inc. corporate website for 21
days. The call can be accessed via phone by dialing (833) 513-0565
and using 6589879.
Additional Materials
An investor presentation regarding the transaction will be
posted on the Investors section of the Jack in the Box company
website at http://investors.jackinthebox.com and will be filed with
the Securities and Exchange Commission.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a
restaurant company that operates and franchises Jack in the Box®
restaurants, one of the nation’s largest hamburger chains, with
more than 2,200 restaurants in 21 states and Guam. For more
information on franchising opportunities with Jack in the Box,
visit JackintheBoxFranchising.com.
About Del Taco Restaurants, Inc.
Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican
and American favorites such as burritos and fries, prepared fresh
in every restaurant's working kitchen with the value and
convenience of a drive-thru. Del Taco's menu items taste better
because they are made with quality ingredients like freshly grilled
chicken and carne asada steak, fresh house-made guacamole, freshly
grated cheddar cheese, slow-cooked beans made from scratch, and
creamy Queso Blanco.
Founded in 1964, today Del Taco serves more than three million
guests each week at its approximately 600 restaurants across 16
states. Del Taco’s commitment to providing guests with the best
quality and value for their money originates from cooking,
chopping, shredding, and grilling menu items from scratch. For more
information, visit www.deltaco.com.
Additional Information and Where to Find It
Del Taco intends to file with the Securities and Exchange
Commission (the “SEC”) a preliminary proxy statement and furnish or
file other materials with the SEC in connection with the proposed
transaction with Jack in the Box. Once the SEC completes its review
of the preliminary proxy statement, a definitive proxy statement
will be filed with the SEC and mailed to the stockholders of Del
Taco. BEFORE MAKING ANY VOTING DECISION, DEL TACO’S STOCKHOLDERS
ARE URGED TO READ THE PROXY STATEMENT AND THOSE OTHER MATERIALS
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE
PROPOSED MERGER.
The proxy statement and other relevant materials (when they
become available), and any other documents filed by Del Taco with
the SEC, may be obtained free of charge at the SEC’s website at
www.sec.gov. In addition, security holders will be able to obtain
free copies of the proxy statement from Del Taco by going to Del
Taco’s Investor Relations page on its corporate website at
www.deltaco.com.
Participants in the Solicitation
Del Taco and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from the
stockholders of Del Taco in connection with the proposed merger.
Information regarding the interests of these directors and
executive officers in the transaction will be included in the proxy
statement described above. Additional information regarding the
directors and executive officers of Del Taco is included in Del
Taco’s proxy statement for its 2021 Annual Meeting, which was filed
with the SEC on April 13, 2021, and is supplemented by other public
filings made, and to be made, with the SEC by Del Taco. These
documents are available free of charge at the SEC’s website at
www.sec.gov and at the Investor Relations page on Del Taco’s
corporate website at www.deltaco.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements may be identified by words such as “anticipate,”
“believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,”
“intend,” “plan,” “project,” “may,” “will,” “would” and similar
expressions. These statements are based on Jack in the Box’s and
Del Taco’s management’s current expectations, estimates, forecasts
and projections about their respective businesses and the industry
in which they operate. These estimates and assumptions involve
known and unknown risks, uncertainties, and other factors that are
in some cases beyond Jack in the Box’s or Del Taco’s management’s
control. Factors that may cause actual results to differ materially
from any forward-looking statements include, but are not limited
to: the potential impacts to each company’s business and operations
resulting from the coronavirus COVID-19 pandemic, the success of
new products, marketing initiatives and restaurant remodels and
drive-thru enhancements; the impact of competition, unemployment,
trends in consumer spending patterns and commodity costs; each
company's ability to reduce G&A and operate efficiently; each
company’s ability to achieve and manage its planned growth, which
is affected by the availability of a sufficient number of suitable
new restaurant sites, the performance of new restaurants, risks
relating to expansion into new markets and successful franchise
development; the ability to attract, train and retain
top-performing personnel; litigation risks; risks associated with
disagreements with franchisees; supply chain disruption;
food-safety incidents or negative publicity impacting the
reputation of each company's brand; increased regulatory and legal
complexities, including federal, state and local policies regarding
mitigation strategies for controlling the coronavirus COVID-19
pandemic; risks associated with the amount and terms of the
securitized debt issued by certain of Jack in the Box’s wholly
owned subsidiaries; and stock market volatility. Additional factors
that may cause actual results to differ materially from any
forward-looking statements regarding the proposed transaction
include, but are not limited to: occurrence of any event, change or
other circumstances that could give rise to the termination of the
merger agreement or the failure to satisfy the closing conditions;
the possibility that the consummation of the proposed transaction
is delayed or does not occur, including the failure of Del Taco’s
stockholders to approve the proposed merger; uncertainty as to
whether the parties will be able to complete the merger on the
terms set forth in the merger agreement; uncertainty regarding the
timing of the receipt of required regulatory approvals for the
merger and the possibility that the parties may be required to
accept conditions that could reduce or eliminate the anticipated
benefits of the merger as a condition to obtaining regulatory
approvals or that the required regulatory approvals might not be
obtained at all; the outcome of any legal proceedings that have
been or may be instituted against the parties or others following
announcement of the transactions contemplated by the merger
agreement; challenges, disruptions and costs of closing,
integrating and achieving anticipated synergies, or that such
synergies will take longer to realize than expected; risks that the
merger and other transactions contemplated by the merger agreement
disrupt current plans and operations that may harm the parties’
businesses; the amount of any costs, fees, expenses, impairments
and charges related to the merger; and uncertainty as to the
effects of the announcement or pendency of the merger on the market
price of the parties’ respective common stock and/or on their
respective financial performance. Additional risks and
uncertainties with respect to Jack in the Box and Del Taco are
discussed in each company’s respective annual report on Form 10-K
and periodic reports on Form 10-Q filed with the SEC, which are
available free of charge online at
http://investors.jackinthebox.com, in the case of Jack in the Box,
and at www.deltaco.com, in the case of Del Taco, as well as on the
SEC’s website at www.sec.gov. Neither Jack in the Box nor Del Taco
undertakes any obligation to update or revise any forward-looking
statement, whether as the result of new information or
otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211206005276/en/
Jack in the Box Chris Brandon Vice President, Investor
Relations chris.brandon@jackinthebox.com 619.902.0269 Tim Lynch /
Scott Bisang / Clayton Erwin / Lucas Pers Joele Frank, Wilkinson
Brimmer Katcher 212.355.4449 Del Taco Investor Relations
Contact: Raphael Gross investor@deltaco.com 203.682.8253 Annie
Drury Allison+Partners deltaco@allisonpr.com 619.342.9386
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