Jack in the Box to sell Qdoba Restaurant unit for $305 million cash

(Reuters) – Restaurant chain operator Jack in the Box Inc 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 , Yum! Brands Inc and Wendys Co 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)