Jack in the Box has entered into a definitive agreement to sell its fast casual Qdoba Restaurant to certain funds managed by affiliates of Apollo Global Management for approximately $305m in cash.
The company will use the net cash proceeds after tax and transaction costs to retire outstanding debt under its term loan.
The transaction is expected to close by April 2018, subject to customary closing conditions and adjustments.
Jack in the Box chairman and chief executive officer Lenny Comma said: “For the past several months, we have worked closely with our financial advisors and evaluated various strategic alternatives with respect to Qdoba, including a sale or spin-off, as well as opportunities to refranchise company restaurants.
“Following the completion of this robust process, our Board of Directors has determined that the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with the company’s desire to transition to a less capital-intensive business model.
“At the time the company acquired Qdoba in 2003, it had 85 locations in 16 states, with $65m in system-wide sales. Over the past 14 years, net units have grown at a compound annual growth rate of 16%.
“Today, Qdoba is the second largest fast-casual Mexican food brand in the US, with more than 700 locations in 47 states, the District of Columbia and Canada, and system-wide sales of more than $820m in fiscal 2017.
“Keith Guilbault, Qdoba Brand president has assembled a talented and experienced management team, and we wish them, the franchisees and all of the brand employees, continued success.”
Morgan Stanley & Co and Dunn & Crutcher are serving as financial advisor and legal counsel to the company in connection with this transaction.
Morgan, Lewis & Bockius, Paul, Weiss, Rifkind, Wharton & Garrison, Deutsche Bank Securities and PJ Solomon have advised Apollo.