Syracuse, N.Y. -- Syracuse-based Carrols Restaurant Group, already the largest Burger King franchisee in the country, is about to get even bigger.
Carrols said Wednesday it has entered into a definitive agreement to acquire 221 restaurants -- 166 Burger Kings and 55 Popeyes -- from Cambridge Franchise Holdings LLC in 10 southeastern and southern states in an all-stock transaction valued at $238 million.
“This is a transformational transaction for our company,” Carrols Chairman and CEO Dan Accordino said in a statement. “It further strengthens our position in the Burger King system and provides us the opportunity to continue executing our Burger King acquisition and expansion strategy.”
Carrols operated 849 Burger Kings at the end of 2018, having acquired 44 Burger Kings, opened 8 new ones and closed 10 existing ones during the year. Sales at its restaurants totaled $1.18 billion in 2018, up 8.3 percent from $1.09 billion in 2017. It will report its 2018 profits later this month.
The transaction will be structured as a tax-free merger. Based in Memphis, Tennessee, Cambridge will receive approximately 7.36 million shares of Carrols common stock. At the close of the deal, it will own approximately 16.6 percent of Carrols’ outstanding common shares.
In addition, Cambridge will receive shares of Carrols preferred stock convertible into approximately 7.45 million shares of common stock at $13.50 a share (a 44 percent premium to the $9.35 closing price of Carrols stock on Tuesday). After the conversion of the preferred stock, Cambridge would hold approximately 24 percent of Carrols.
Carrols said it expects to refinance approximately $100 million of debt it will assume from Cambridge. (The $238 million value of the transaction includes the assumed debt.)
Cambridge is controlled by investment firm Garnett Station Partners’ managing partners Matt Perelman and Alex Sloane. Perelman and Sloane formed Garnett Station in 2014 when they partnered with Ray Meeks to grow his 23-unit Burger King business.
Headquartered at 968 James St., Carrols operates in 18 states and employs 22,000 people. It has operated Burger Kings since 1976.
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