Del Taco Restaurants, Inc. (NASDAQ: TACO) is the second largest Mexican fast food restaurant in the United States, which serves a wide variety of menu items with chicken, carne asada, guacamole, beans, cheese and more. The fast food restaurant was founded in 1964 and currently serves an average of around three million customers each week across its 600 locations in 16 states.
Shares of Del Taco are soaring 66% through afternoon trading on Monday, December 6, 2021. Over the past three months, Del Taco Restaurants has seen average daily volume of 215,100 shares. However, volume of 8.18 million shares or dollar volume of around $102.25 million, has already exchanged hands through early trading on Monday.
The Mexican fast food restaurant is seeing shares surge after the company announced that it has entered into a definitive agreement to be acquired by Jack in the Box, Inc. (NASDAQ: JACK) for $12.51 per share in cash. This gives the transaction an aggregate value of around $575 million, including debt. The acquisition brings together two fast food rivals, which features complementary synergies amid the growing popularity for quick serve restaurants. As such, Jack in the Box management values Del Taco at a synergy-adjusted multiple of 7.6x trailing twelve month adjusted EBITDA.
Once the merger is completed, the newly-combined company will have over 2,800 restaurants across 25 states. Both management teams believe that together, the companies will provide greater scalability, guest experiences, and more growth potential.
“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.”
Disclosure: Neither Spotlight Growth nor its officers have any position or relationship with any companies mentioned in this article, but may choose to initiate a position at any time. No payment was made to create this article. This article should not be taken as a solicitation or recommendation to buy or sell any securities. Please conduct your own research and consult your financial advisor to determine your risk tolerance and investment path. We are not licensed brokers or investment advisors.
