Del Taco is close to an agreement in which it would be sold to a company controlled by Chicago-based restaurateur Larry Levy, in a move that would take Del Taco public, according to Reuters.
Levy’s “blank check” company, Levy Acquisition Corp., is in “advanced talks” to acquire the 550-unit, Lake Forest, California-based taco chain, in a deal that could value it at as much as $500 million, Reuters said.
Levy Acquisition Corp. must still secure financing, and it is possible that the talks could end without an agreement, according to the report.
Del Taco has been exploring a sale for months. The taco chain is owned by a consortium of private-equity firms, including Goldman Sachs, Charlesbank Capital Partners and Leonard Green & Partners. Reports of the possible sale came shortly after the company completed a debt refinancing led by GE Capital.
Neither Levy nor Del Taco responded to requests for comment by press time.
Levy formed Levy Acquisition Corp. in 2013, and raised $150 million in an IPO that year, with the goal of acquiring a restaurant or hospitality company. The company has until Nov. 19, 2015, to find a company to purchase, or it must cease operations.
A “blank check” company is a shell corporation that sells stock to public investors with the purpose of acquiring an unnamed company. They are highly speculative, and act similarly to a publicly traded private-equity firm. The acquired company then goes public and assumes the blank check company’s stock symbol.
Based on Nation’s Restaurant News Top 200 data, Del Taco is the third-largest limited-service Mexican chain, behind market leader Taco Bell and fast-casual Chipotle Mexican Grill.
Del Taco, founded in 1964, is the 67th largest restaurant chain in the U.S., based on NRN data, with $621.6 million in domestic system sales in 2013, which has grown 5.4 percent over the past two years. Its locations are primarily in the West.
Since starting a brand relaunch in 2011, the chain has been working on a new menu and remodeling program. Many of its locations haven’t been revamped in two decades.
Levy opened a single Chicago deli in 1978, and turned it into an international food company that generates more than $1 billion in annual revenue. Levy Restaurants owns several fine-dining restaurants, as well as concession stands at numerous sports arenas and stadiums, such as Wrigley Field and U.S. Cellular Park, both in Chicago. It also caters big events, like the Kentucky Derby, the Super Bowl and the Grammy Awards.
In 2003, Levy founded an investment firm, Levy Family Partners, which he runs with his sons Ari B. Levy and Steven C. Forsheim. The investment firm manages more than 200 employees and has made more than 200 investments, many of which are in the restaurant business.
In May 2013, the Levy family became a minority owner in Blaze Pizza, and a company operated by the Levy family is a franchisee of the fast-casual pizza concept. It plans to open 50 locations in Chicago and Miami over the next six years.
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