Burger King franchisee Carrols Restaurant Group Inc. said Wednesday its board of directors had approved the spin-off of Fiesta Restaurant Group Inc., an indirect wholly owned subsidiary comprising the Pollo Tropical and Taco Cabana fast-casual brands.
The spin-off of Fiesta, which is expected to be finalized May 7, will be completed through a tax-free dividend of common stock of Fiesta to Carrols’ shareholders.
As of Jan. 1, 2012, Fiesta’s company-owned restaurants included 91 Pollo Tropical locations and 158 Taco Cabana outlets. Fiesta franchises 31 Pollo Tropical restaurants in Florida, Puerto Rico, Ecuador, Honduras, Trinidad, Venezuela and the Bahamas.
Carrols operated 298 Burger King locations as of Jan. 1, 20212.
For the year ended Dec. 31, 2011, Carrols generated total revenues of $822.5 million, of which Fiesta accounted for $475.0 million, or 57.7 percent of total consolidated revenues.
Late last summer, Syracuse, N.Y.-based Carrols named Tim Taft chief executive of Fiesta Restaurant Group.
Carrols’ stockholders will receive one share of Fiesta common stock for each share of Carrols common stock held at the close of business April 26.
Following the distribution, Carrols’ stockholders will own 100 percent of Fiesta’s outstanding common stock.
Fiesta’s common stock was scheduled to begin trading on a “when issued” basis April 26 on the NASDAQ exchange under the symbol FRGI, and will begin trading on a “regular way” basis May 8.
Carrols’ common stock will continue to trade on NASDAQ exchange under the symbol TAST.
Late last month Carrols also announced that it had agreed to acquire 278 company-owned Burger King locations through an asset purchase agreement with Burger King Corp. Carrols said the transaction would make it the system’s largest global franchisee with 575 Burger King units.
Carrols also agreed to pay Burger King about $15.8 million for the Burger King outlets, which are in Ohio, Indiana, Kentucky, Pennsylvania, North Carolina, South Carolina and Virginia. The acquisition also will give the Miami-based franchisor a 28.9-percent equity interest in Carrols.
Editor's Note: A previous version of this story incorrectly stated Alan Vituli was chairman and CEO of Carrols and chairman of Fiesta. Vituli retired from both company's earlier this year.
Contact Paul Frumkin at [email protected].