Under the watch of Sardar Biglari, Jack in the Box voluntarily consumes a hostile takeover measure
In a move to fend off a potential hostile takeover, fast-food chain Jack in the Box has adopted a shareholder rights plan, also known as a poison pill, in response to increased shares held by Sardar Biglari's Biglari Capital Corp.
Biglari Capital, which also owns Steak n Shake and Western Sizzlin, has recently increased its stake in Jack in the Box to 9.9%. The company, which initially acquired a 5.5% stake more than two years ago, has not filed any documents with the SEC regarding this latest purchase.
The poison pill strategy is designed to ensure fair treatment of shareholders in the event of a takeover and to prevent tactics that could gain control without an appropriate premium. If any party accumulates 12.5% or more of the company’s shares, other shareholders will be given the opportunity to buy discounted shares, diluting the potential acquirer's stake and making a takeover more expensive or impractical.
Jack in the Box's board, led by chairman David Goebel, has expressed confidence in management's ability to improve the company's long-term financial performance. The board is committed to protecting shareholders and remains confident in the company's 'Jack on Track' turnaround plan, which includes closing underperforming restaurants, shifting away from Del Taco, selling real estate, and focusing on debt reduction.
As part of the company's turnaround strategy, Jack in the Box is considering moving on from Del Taco, potentially indicating plans to sell or spin off the brand. This decision comes amidst struggles with same-store sales at both Jack in the Box's flagship chain and Del Taco.
Meanwhile, El Pollo Loco, a separate chicken chain, has become another point of interest for Biglari Capital. The company has made an acquisition offer for El Pollo Loco, though this is independent of the Jack in the Box situation. Recently, El Pollo Loco attracted a $14.7 million investment from CapitalSpring, which may lead the chain in a different direction, further complicating or possibly competing with Biglari’s ambitions.
With the adoption of the poison pill strategy, Biglari Capital's takeover attempt on Jack in the Box is being actively resisted. The company's future with Del Taco remains uncertain, while El Pollo Loco remains a separate target with independent developments.
[1] Restaurant Business, 2023 [2] The Wall Street Journal, 2023 [3] Forbes, 2023
The editor-in-chief of Restaurant Business, a longtime industry journalist with a focus on quick-service restaurants, covers restaurant finance, mergers and acquisitions, and the economy. The market cap of Jack in the Box is currently $360 million, a figure that is $200 million less than what Jack in the Box paid for Del Taco in 2021.
- The ongoing battle for control of Jack in the Box is a significant topic in the restaurant finance industry, as the company dilutes potential acquirers with the poison pill strategy and explores spin-off options for Del Taco.
- As part of their focus on the restaurant industry, The Wall Street Journal and Forbes are closely monitoring the finance aspects of the attempted takeover by Biglari Capital of Jack in the Box, as well as the potential acquisition of El Pollo Loco by the same firm.
