(Reuters) - Restaurant chain operator Jack in the Box Inc (JACK.O) said it would sell its Qdoba Restaurant Corp unit to funds affiliated with Apollo Global Management LLC for about $305 million cash.
Qdoba Restaurant operates and franchises more than 700 Qdoba Mexican Eats restaurants.
“(The deal) is consistent with the company’s desire to transition to a less capital-intensive business model,” Lenny Comma, the chief executive officer of Jack in the Box said in a statement.
Restaurant operators have been struggling due to higher wages and waning demand for fast-food options. McDonald’s Corp (MCD.N), Yum! Brands Inc (YUM.N) and Wendys Co (WEN.O) have been aggressively franchising, while others have been divesting restaurants to keep more money.
Reuters reported in November that Apollo was nearing a deal to buy Qdoba for more than $300 million, citing people familiar with the matter.
San Diego-based Jack in the Box acquired Qdoba for $45 million in 2003. The restaurant chain initially enjoyed fast revenue growth but has faltered in recent quarters.
Morgan Stanley & Co LLC is serving as financial adviser and Gibson, Dunn & Crutcher LLP is the legal counsel to Jack in the Box. Apollo was advised by Morgan, Lewis & Bockius LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Deutsche Bank Securities Inc, and PJ Solomon.
The deal is expected to close by April 2018, Jack in the Box said.
Reporting by Gayathree Ganesan in Bengaluru; Editing by Bernard Orr