American fast-food restaurant chain Jack in the Box (NASDAQ: JACK) recently announced that it will acquire the Mexican fast-food chain Del Taco (NASDAQ: TACO) for $575 million, valuing Del Taco at about $12.51 per share. Both chains have had over 2,800 restaurants that go across 25 states, and most of them exist on the West Coast.
This deal will move toward the states of Alabama, Florida, Georgia, and Michigan. Del Taco specifically has had over 600 restaurants across the span of about 16 states, which makes it the second biggest Mexican fast-food chain, falling closely behind Taco Bell (NYSE: YUM).
Regarding the deal, Jack in the Box CEO Darin Harris said: "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."
Jack in the Box shares have lessened by over 3% during Monday afternoon trading. The company's stock has dropped by over 10% throughout this year, which means that its market-value is around $1.76 billion. Del Taco's shares skyrocketed by over 65% following the deal's announcement, which made its market valuation amount to over $450 million.
Jack in the Box has predicted that the deal will increase its earnings per share over the course of its first year. By the time that 2023 rolls around, according to Jack in the Box, it will have made around $15 million from the deal, which will involve supply chain savings, as well as knowledge-sharing initiatives.
With Jack in the Box's acquisition of Del Taco, it will broaden the horizons of those who wish to explore other types of restaurant food. Culturally and financially speaking, the deal will surely bring about fresher perspectives, which will work to the benefit of both consumers and the restaurants themselves.