How did Jack In The Box fund the acquisition of Del Taco?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
ded from the purchase price. The awards which are subject to continued service will be recognized ratably as stock-based compensation expense over the requisite service period.
The acquisition of Del Taco was funded by cash on hand and borrowings under our 2022 Class A-2 Notes and 2022 Variable Funding Notes. The Company recognized transaction costs of $12.3 million in fiscal 2022. These costs were associated with advisory, legal, and consulting services and are presented in "Other operating expense, net" in the consolidated statement of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Purchase consideration — The following summarizes the purchase consideration paid to Del Taco shareholders (in thousands, except per share data):
| A | Amount | |
|---|---|---|
| Del Taco shares outstanding as of March 8, 2022 | 36,442 | |
| Del Taco RSAs subject to accelerated vesting | 805 | |
| Del Taco RSUs subject to accelerated vesting | 70 | |
| Del Taco options subject to accelerated vesting | 292 | |
| Total Del Taco shares outst |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 93–94)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, the acquisition of Del Taco was funded through a combination of existing cash reserves and new debt. Specifically, Jack In The Box used cash on hand along with borrowings under its 2022 Class A-2 Notes and 2022 Variable Funding Notes to finance the purchase. The company recognized $12.3 million in transaction costs in fiscal year 2022 related to advisory, legal, and consulting services associated with the acquisition. These costs are reflected in "Other operating expense, net" in the consolidated statement of operations.
The total purchase consideration for Del Taco amounted to $593.309 million. This included $470.500 million in cash paid to selling shareholders, calculated at $12.51 per Del Taco share. Additionally, Jack In The Box settled $115.219 million of Del Taco's closing indebtedness and paid $7.141 million in Del Taco transaction costs. There was also $449 thousand in replacement share-based payment awards pre-combination vesting expense.
For a prospective franchisee, this indicates that Jack In The Box has the financial capacity to make significant acquisitions, which can lead to increased brand recognition, market share, and potential synergies. However, it also means that the company carries a substantial amount of debt, which could impact future financial performance and strategic decisions. Franchisees should monitor the company's financial statements and performance to assess the impact of the acquisition and associated debt on the overall health and stability of the Jack In The Box franchise system.