Jack in the Box announced Monday morning that the company “is exploring a range of strategic and financing alternatives,” including a possible sale of the company. It has already held discussions with potential buyers, the chain added, noting that there’s no assurance a transaction will take place.
Reuters reported in November that 2,400-unit Jack in the Box was engaged with private-equity firms in talks to sell the company. The company said Monday that legal and financial advisers are supporting its board of directors and management team. It said alternatives could also include “previously announced plans to increase its leverage.”
Jack in the Box did not set a timetable for the conclusion of the process and has not made “any decision related to any strategic or financing alternative at this time.”
“That said, in the absence of a strategic transaction the company remains committed to its previously communicated plan to have a new capital structure in place by the end of the first half of fiscal 2019,” Jack in the Box said in a release. “That capital structure could include, among other things, a securitization or bond issuance.”
Jack in the Box added that it does not intend to comment further regarding the review unless or until it determines that further disclosure is appropriate or required by law.
Per Reuters, Jack in the Box’s market capitalization was about $2.15 billion as of Monday morning.
The burger chain’s annual sales have declined since 2016. This past quarter—Q4 fiscal 2018—adjusted earnings from continuing operations came in at 77 cents per share, which missed the Zacks Consensus Estimate of 83 cents. Total sales of $177.5 million beat the call for $174 million, but decreased 23.5 percent, year-over-year. Same-store sales gained 0.8 percent compared to the prior-year decline of 2 percent, driven by average check growth of 2.8 percent and offset by a 2 percent decline in transactions. Broken down, franchised units saw a 0.4 percent uptick in comps and company-run units climbed 0.8 percent. There were 276 corporate and 2,100 franchised units by quarter’s end.
If Jack in the Box is dealt, it would signal another major M&A move in the restaurant space.
Jack in the Box sold 700-unit Qdoba to private equity firm Apollo Global Management LLC in March. Arby’s and Buffalo Wild Wings owner Inspire Brands forked up some $2.3 billion for Sonic Drive-In this past September. Inspire, backed by Roark Capital, spent $2.9 billion on 1,200-plus-unit Buffalo Wild Wings in February. Another recent restaurant move was the October $593 million sale of 766-unit Bojangles’ to Durational Capital Management LP and The Jordan Company, L.P.
