Jack in the Box Inc. announced that it will be buying Del Taco Restaurants Inc. Del Taco shares saw a steep rise in share price and trading was halted after shares reached $7.50 in premarket trading. Shares of Jack in the Box saw a less than one percent increase in premarket trading.

The deal has a value of approximately $575 million, inclusive of debt. Jack in the Box has agreed to pay $12.51 in cash per share. The transaction is expected to be finalized in the first quarter of 2022. Following this the combined fast food restaurant chain will have more than 2,800 restaurants located in 25 states across the nation.

Del Taco is the second largest Mexican fast-food chain by number after Yum Brands’ Taco Bell with about 600 restaurants located in 16 states across the nation. During the fiscal year 2021, the restaurant chain reported $521 million as revenue, according to Forbes.

Jack in the Box, which is one of the largest burger chains in the nation, has more than 2,200 restaurants in locations in 21 states in the nation. In the fiscal year ending October, the company reported $1.14 billion in revenue, according to Forbes.

Jack in the Box believes that the combination of the two restaurant chains would achieve synergies in procurement as well as in supply chain savings. They will combine technology and digital efficiencies and gain other financial benefits as well.

Darrin Harris, CEO of the burger chain, Jack in the Box that the deal was “a natural combination of two like-minded, challenger brands with outstanding growth opportunities.”

CNBC reported that Jack in the Box has said that the deal will see its earning per share grow by mid-single digits in the first year after the deal is finalized and after excluding transaction expenses. It is also forecasting better results for end of fiscal 2023. It is hoping to get $15 million in benefits from this deal, which would include supply chain savings as well as knowledge sharing initiatives.

Images Facebook Jack in the Box/Del Taco