Del Taco Merger Agreement

4 Months Ended

Jan. 23, 2022

Business Combinations [Abstract]

Del Taco Merger Agreement

DEL TACO MERGER AGREEMENT

Agreement and Plan of Merger — As previously announced, the Company entered into an Agreement and Plan of Merger dated as of December 5, 2021 (the “Merger Agreement”) with Del Taco Restaurants, Inc., a Delaware corporation (“Del Taco”), to acquire Del Taco (the “Merger”). Del Taco is the nation’s second largest Mexican quick service restaurant chain by number of restaurants and has approximately 600 restaurants across 16 states.

Subject to certain specified exceptions, at the effective time of the Merger, each share of Del Taco common stock issued and outstanding will be converted into the right to receive $12.51 in cash in a transaction valued at approximately $575.0 million, including existing debt. The transaction, which is expected to close in the first calendar quarter of 2022, is subject to certain customary closing conditions, including Del Taco’s shareholder approval and the receipt of required regulatory approvals.

In connection with the Merger Agreement, the Company entered into a letter agreement with BofA Securities, Inc. pursuant to which BofA Securities, Inc. has agreed to provide financing for the Merger, in an amount of up to $600.0 million under the Company’s existing securitization facility. No amounts were drawn under the letter agreement, which was terminated as a result of our securitization refinancing transaction disclosed in Note 15, Subsequent Events.

The Merger Agreement provides for certain termination rights for both Jack in the Box and Del Taco and provides that, in connection with a termination of the Merger Agreement under certain specified circumstances, Del Taco will be required to pay Jack in the Box a termination fee of $14.2 million or Jack in the Box will be required to pay Del Taco a termination fee of $28.4 million.

The Company has incurred costs related to the merger of $3.0 million for the quarter, including legal, accounting, and other professional fees and expenses. These costs are included in “Other operating expenses (income), net” in the accompanying condensed consolidated statements of earnings.