Carrols Restaurant Group Inc. has completed its previously announced acquisition of 165 Burger King and 55 Popeyes Louisiana Kitchen restaurants from Cambridge Franchise Holdings LLC, the company said Tuesday.
The Syracuse, N.Y.-based Carrols said the acquisition of quick-service units in 10 Southern and Southeastern states brings its total to 1,065 franchised units and solidifies its spot as the largest franchisee of Restaurant Brands International Inc.
The deal was valued at about $238 million, and Carrols now operates 1,010 Burger King and 55 Popeyes restaurants in 23 states.
“This transaction is an exciting growth catalyst for Carrols,” said Dan Accordino, Carrols CEO and chairman, in a statement. “We believe it strengthens our position in the Burger King system by providing us the opportunity to continue executing our acquisition and expansion strategy, and adds Popeyes, a growing brand that further enhances our expansion alternatives.”
As part of the deal, Carrols agreed to develop 200 new Burger King and 70 Popeyes restaurants over the next six years and to remodel or upgrade a number of its Burger King restaurants (or restaurants to be acquired) to the “Burger King of Tomorrow” image over the same period.
Carrols also entered into an area development and remodeling agreement with Burger King Corp. that pre-approves the company for continued growth through both acquisitions and new restaurant development. Carrols’ right of first refusal terms were expanded to allow for the acquisition of 500 additional Burger King restaurants. Carrols also assumed Cambridge’s existing Popeyes development Agreement and its right of first refusal for Popeyes acquisitions in Tennessee and Kentucky.
The companies said the stock-based transaction included no cash consideration.
In conjunction with the merger, Alex Sloane and Matt Perelman, the co-founders of Cambridge, have joined Carrols’ board of directors.
“Matt and I are excited to join the Carrols Board and support the next phase of the company’s growth,” Sloane said in a statement. “We believe that Carrols’ strong management team, efficient financing structure, partnership with RBI and compelling capital allocation plan provide for a long runway to enhance shareholder value.”
Cambridge Franchise Holdings, controlled by Garnett Station Partners, was founded in 2014 when Perelman and Sloane partnered with Ray Meeks to grow his 23-unit Burger King business. Garnett Station Partners, founded by co-managing partners Sloane and Perelman, is an investment firm focused on retail and consumer companies.
Carrols has operated Burger King restaurants since 1976.
Acccording to Nation’s Restaurant News Top 200 research, Carrols’ restaurants generated $1.18 billion in U.S. sales in fiscal 2018, up 8.3% from $1.09 billion in fiscal 2017. It ended 2018 with 849 Burger King restaurants, an uptick of 5.2% from 807 locations at the end of 2017.
Alan Liddle, NRN’s senior data and events editor, contributed to this report.
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