United States | Restaurant Brands International Inc. and Carrols Restaurant Group, Inc. have announced that they have reached an agreement for RBI to acquire all of Carrols issued and outstanding shares that are not already held by RBI or its affiliates for $9.55 per share in an all-cash transaction, or an aggregate total enterprise value of approximately $1.0 billion, representing a 23.1 percent premium to Carrols 30-day volume-weighted average price as of January 12, 2024 and a 13.4 percent premium to the January 12, 2024 closing price.
Carrols is the largest Burger King franchisee in the United States, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the twelve months ending September 30, 2023. Carrols also owns and operates 60 Popeyes restaurants in six states.
Tom Curtis, President of Burger King U.S. and Canada, said Carrols has demonstrated strong and improving restaurant operations over the years.
"This acquisition is an exciting accelerator to our Reclaim the Flame plan that is focused on relentlessly pursuing a better experience for our Guests. We are going to rapidly remodel these restaurants over the next five years or so and put them back into the hands of motivated, local franchisees to create amazing experiences for our Guests."
Deborah Derby, President and CEO of Carrols said the announcement is a testament to the more than 24,000 Carrols team members who have helped drive the company to record levels of profitability over the past 12 months.
"These results have allowed us, through this transaction, to deliver an immediate and certain value to Carrol's shareholders at an attractive premium to the Company's current and historical share prices. Additionally, we believe our team members will now have additional opportunities as part of the greater RBI family – in our office, in the field and especially in our restaurants, including for long-time managers who may want to become franchisees themselves. We look forward to working closely with Tom and the rest of the Burger King team in the months and years ahead."
Josh Kobza, CEO of RBI, said this was a terrific example of the company's commitment to put its capital to work to accelerate growth and supportthe team in their broader efforts to have a more competitive Burger King restaurant base.
"The strategic merits of this acquisition are very compelling and consistent with our objective to invest our capital in long-term, high-return opportunities," said Kobza.
The transaction is part of Burger King's 'Reclaim the Flame' plan to accelerate sales growth and drive franchisee profitability. The transaction follows the brand's initial $400 million investment announced in September 2022 to drive high-quality remodels, improve operations, enhance marketing and support ongoing technology and digital priorities.
Burger King expects to significantly accelerate Carrols' current rate of remodels to bring the acquired portfolio to a modern image over the next five years. To accomplish this, the team plans to invest approximately $500 million of capital, funded by Carrols' operating cash flow, to remodel approximately 600 acquired restaurants that are not currently considered modern image.
Carrols has a team of strong, experienced operators who will operate the acquired restaurants in partnership with Burger King's operations teams. Burger King ultimately plans to franchise the vast majority of the portfolio to new or existing smaller franchise operators who live in their local communities. Following refranchising the acquired restaurants, which we expect will be completed in five to seven years, Burger King will maintain a company restaurant portfolio of a couple of hundred restaurants for strategic innovation, training, and operator development purposes.
