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Carrols to acquire 221 Burger King, Popeyes restaurants in merger with Tennessee franchisee

By Eric Reinhardt


The Burger King location on Route 57 in Clay. Syracuse–based Carrols Restaurant Group, Inc. (NASDAQ:TAST), the largest Burger King franchisee in the U.S., on Wednesday announced plans to acquire 166 Burger King and 55 Popeyes restaurants in 10 Southeastern and Southern states in a merger with a Tennessee franchisee. (Adam Rombel / BJNN)

SYRACUSE, N.Y. — Carrols Restaurant Group, Inc. (NASDAQ:TAST) has agreed to acquire 166 Burger King and 55 Popeyes restaurants in 10 Southeastern and Southern states in merger with a Tennessee franchisee.

Syracuse–based Carrols, the largest Burger King franchisee in the U.S., is merging with Memphis, Tennessee–based Cambridge Franchise Holdings, LLC, Carrols said in a news release.

In addition to its “strong” restaurant portfolio in these “attractive geographies,” Cambridge has an “established track record” of developing both new Burger King and new Popeyes restaurants that Carrols believes will benefit its stockholders and “broaden its capital allocation and growth opportunities,” per the release.

Dan Accordino, chairman and CEO of Carrols Restaurant Group, called it a “transformational transaction” for the company.

“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. Cambridge also brings a strong, growing second brand in Popeyes to Carrols’ portfolio, and they have demonstrated strong returns on new restaurant development in their geographies. We look forward to partnering with them as we work to improve returns for our stockholders through additional, diversified alternatives for future growth and effective capital allocation,” Accordino said.

Carrols had 849 restaurants as of Dec. 30, 2018 and has operated Burger King restaurants since 1976.

About Cambridge

Cambridge Franchise Holdings was founded in 2014 when Matt Perelman and Alex Sloane partnered with Ray Meeks to grow his 23-unit Burger King business. Since 2014, Meeks, Perelman, and Sloane have grown Cambridge to include 166 Burger King restaurants and 55 Popeyes eateries throughout the Southeast.

Perelman and Sloane are co-managing partners of Garnett Station Partners (GSP), an investment firm focused on retail and consumer companies. Garnett Station Partners has offices in Bartlett, Tennessee and New York City, per its website.

Merger deal

The transaction will structured as a tax-free merger. Cambridge, which is controlled by Garnett Station Partners and owned by some large family office investors, will receive about 7.36 million shares of Carrols common stock, and at closing will own about 16.6 percent of Carrols’ outstanding common shares. The transaction doesn’t include a cash component.

As part of the deal, Cambridge will have the right to designate up to two director nominees and Perelman and Sloane will join the Carrols board of directors upon completion of the merger.

Carrols believes that Cambridge will provide it with a “platform and relationships to grow” within the Popeyes brand. Cambridge has already built a Popeyes business with 55 restaurants in Kentucky, Louisiana, Mississippi, and Tennessee and has additional “growth opportunities” through both acquisitions and new restaurant development. As part of the transaction, Carrols will assume Cambridge’s existing development agreement with Popeyes, which provides for an acquisition right-of-first-refusal in Tennessee and Kentucky and the development of about 70 new Popeyes restaurants over the next six years.

“We are excited about the opportunity to grow with Popeyes which is a strong brand,” Accordino said. “As a second, complementary brand to our considerable Burger King holdings, it provides Carrols with another avenue for growth including new restaurant development given Cambridge’s development pipeline, and expansion through the opportunity to acquire additional Popeye’s restaurants in the future. Adding Popeyes to our restaurant portfolio also offers diversification to our commodities exposure and geographic footprint.”

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