Jack in the Box Inc. : Blog Exposure – Fast Food Chain Jack in the Box Sells Mexican Restaurant Business Qdoba to PE Firm Apollo Global Management
LONDON, UK / ACCESSWIRE / December 21, 2017 / Active-Investors.com has just released a free report on Jack in the Box Inc. (NASDAQ: JACK). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=JACK. On December 19, 2017, the Company announced that it has signed an agreement to sell off its wholly owned subsidiary – Qdoba Restaurant Corporation to certain funds managed by affiliates of Apollo Global Management, LLC (NYSE: APO) (“Apollo”). The all-cash deal is valued approximately $305 million and is subject to adjustments at the time of closing of the transaction. Register today and get access to over 1000 Free Research Reports by joining our site below:
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The transaction is expected to close by April 2018 and is subject to regulatory approvals and other closing conditions. Jack in the Box plans to utilize the funds raised from this sale to retire its long-term credit facility.
With this acquisition, Apollo is expanding its portfolio of food-related businesses. Apollo already owns specialty grocery retailer The Fresh Market (acquired in 2016) and Chuck E. Cheese’s parent CEC Entertainment, Inc. (acquired in 2014). Apollo also owns stock in Hostess Brands, Inc.
Commenting on the sale of Qdoba, Lenny Comma, Chairman and CEO of Jack in the Box, 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.”
Lance Milken, Senior Partner at Apollo, added:
“We are extremely excited to be acquiring Qdoba and look forward to working with the management team, employees and franchisees to continue building the Qdoba brand. We are firmly committed to Qdoba’s continued growth as a leading fast-casual restaurant operator.”
Qdoba Mexican Eats is the brand under which Qdoba Restaurant Corporation owned and operated a chain of fast casual restaurants serving Mexican-style food. Qdoba was founded in 1995 and was acquired by Jack in the Box in January 2003 for $45 million. At the time of acquisition in 2003, Qdoba had 85 restaurant locations in 16 states in the US and annual sales of $65 million. At present, there are over 700 restaurant locations in 48 states in US as well as in Canada. Qdoba also provides catering services. Qdoba’s sales for the fiscal year 2017 was over $820 million.
Qdoba’s same-store sales have been declining in recent times and was affecting the overall performance and valuations of Jack in the Box. Some of the leading factors influencing the decline of Qdoba’s business included rising labor costs, increased competition in the fast-casual dining sector, and sudden jump in avocado prices. Hence, Jack in the Box had been contemplating strategic alternatives for Qdoba since the start of this year.
Consolidation in the Restaurants business
The Restaurant business has been witnessing a trend of consolidation as evidenced by some of the recent deals. In November 2017, Private-equity firm Roark Capital, the parent Company of Arby’s Restaurant Group, announced the acquisition of Buffalo Wild Wings for approximately $2.9 billion. In October 2017, Atlanta-based private equity firm NRD Capital acquired Restaurant Chain Ruby Tuesday for an enterprise value of about $335 million. In May 2017 private-equity firm Golden Gate Capital completed the acquisition of Bob Evans Restaurants in a $565 million-plus deal. In February 2017, Restaurant Brands International Inc. (owners of Burger King®) announced the acquisition of Popeyes Louisiana Kitchen, Inc., a chicken-focused fast-food chain, in a deal valued at $1.8 billion.
About Jack in the BoxInc.
Founded in 1951, San Diego, California based Jack in the Box is a leading fast-food hamburger chains that operates and franchises Jack in the Box® restaurants. It has more than 2,200 quick-serve restaurants in 21 states and Guam. It offers a selection of distinctive, innovative products including hamburgers, specialty sandwiches, salads, and real ice cream shakes. It is supported by a team of over 20,000 employees.
About Apollo Global Management LLC
Founded in 1990, Apollo is an alternative investment manager in private equity, credit, and real estate. The Company has total asset under management (AUM) of approximately $242 billion as of September 30, 2017. Apollo focuses on opportunities in nine core industries including Business Services, Chemicals, Consumer Services, Consumer & Retail, Financial Services, Leisure, Manufacturing & Industrial, Media/Telecom/Technology and Natural Resources. It has offices across the globe including in New York, Los Angeles, Houston, Chicago, St. Louis, Bethesda, Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong and Shanghai. The investment firm has a team of 988 employees, including 368 investment professionals.
Stock Performance Snapshot
December 20, 2017 – At Wednesday’s closing bell, Jack in the Box’s stock fell 3.16%, ending the trading session at $100.18.
Volume traded for the day: 1.09 million shares, which was above the 3-month average volume of 675.58 thousand shares.
Stock performance in the last three-month period ? up 2.92%
After yesterday’s close, Jack in the Box’s market cap was at $2.96 billion.
Price to Earnings (P/E) ratio was at 22.31.
The stock has a dividend yield of 1.60%.
The stock is part of the Services sector, categorized under the Restaurants industry. This sector was up 0.1% at the end of the session.
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