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Jack in the Box takes poison pill as activist investor increases stake

Jack in the Box on Mill Avenue in Tempe Arizona 3/16/19; Shutterstock ID 1342618712
Jack in the Box has approximately 2,190 restaurants across 22 states.

Jack in the Box Inc. has made a move to defend itself against a potential hostile takeover.

The quick-serve chain has adopted a limited-duration shareholder rights plan, commonly referred to as a poison pill, after Biglari Capital Corp. bought additional shares of stock. The action came Biglari told Jack in the Box it now holds 9.9% of Jack in the Box stock and intends to increase its stake in the company. 

Biglari Capital, whose holdings include Steak n Shake and Western Sizzlin', has attempted to take control of Cracker Barrel and El Pollo Loco during the past year, reported QSR Magazine.

According to Jack in the Box, the plan is designed to ensure that all stockholders “receive fair and equal treatment in the event of any proposed takeover of the company, and to guard against tactics to gain control of the company without paying all stockholders an appropriate premium for that control.

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The move comes as Jack in the Box is executing a turnaround effort that includes includes closing 150 to 200 underperforming restaurants, the potential sale of its Del Taco brand, and prioritizing paying down its debt. 

“Jack in the Box’s Board is committed to protecting our stockholders and remains confident in management’s ability to execute the company’s 'JACK on Track' plan to improve long-term financial performance across its restaurant system, strengthen its balance sheet and transition to an asset-light business model,” stated David L. Goebel, independent chairman of the board. 

The adoption of rights plan is intended to provide the company with adequate time to execute its plan and ensure stockholders are able to realize the full potential of their investment in the company, added Goebel.

Jack in the Box Inc. operates and franchises Jack in the Box, one of the nation's largest hamburger chains with approximately 2,190 restaurants across 22 states, and Del Taco, the second-largest Mexican-American QSR chain by units in the U.S. with approximately 590 restaurants across 17 states.

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