(Reuters) – Levy Acquisition Corp, the blank-check acquisition vehicle of Chicago restaurateur Larry Levy, is in advanced talks to acquire Del Taco Inc, a U.S. fast food chain specializing in Mexican cuisine, according to people familiar with the matter.
Levy is negotiating a deal that could value Del Taco at as much as $500 million, including debt, the people said this week. The acquisition vehicle needs to secure financing for the deal, and it is possible the talks could end without an agreement, the people added.
The sources asked not to be identified because the matter is confidential. Del Taco and Levy Acquisition representatives did not respond to requests for comment.
Founded in 1964, Lake Forest, California-based Del Taco owns and operates 560 restaurants in 16 U.S. states serving Mexican cuisine and American favorites such as burgers and fries.
The majority of Del Taco’s locations are in West Coast states including California and Oregon. Del Taco serves more than three million customers each week.
Del Taco is owned by a consortium of private equity firms that include Goldman Sachs Mezzanine Partners, Charlesbank Capital Partners and Leonard Green & Partners LP.
Del Taco is one of a number of restaurant chains trying to sell themselves or go public as market valuations for the sector continue to hold strong.
Burger chain Shake Shack Inc saw its shares more than double the day of its initial public offering last month.
Levy is the co-founder of Levy Restaurants, which operates concession stands at arenas including Wrigley Field and U.S.
Cellular Park and owns well-known Chicago restaurants like Spiaggia, which is regarded as one of President Obama’s favorite restaurants in the city.
Levy Acquisition Corp raised $150 million in an IPO in 2013.