Burger King parent company to acquire Syracuse-based Carrols in $1 billion deal

SYRACUSE, N.Y. — A Syracuse–based company that is the largest Burger King franchisee in the U.S. will soon be under the ownership of Burger King’s parent company.

Carrols Restaurant Group, Inc. (NASDAQ: TAST), headquartered in Syracuse, and Restaurant Brands International Inc. (RBI) (NYSE: QSR), based in Toronto, on Tuesday announced the acquisition agreement.

Under the deal, RBI will 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, per a news release on the Carrols website.

It also represents an aggregate total enterprise value of about $1 billion, representing a 23.1 percent premium to Carrols 30-day volume-weighted average price as of Jan. 12, and a 13.4 percent premium to the Jan. 12 closing price.

The transaction is expected to be completed in this year’s second quarter.

Carrols is currently the largest Burger King franchisee in the U.S., operating 1,022 Burger King restaurants in 23 states. Those restaurants generated about $1.8 billion of system sales during the 12 months ending Sept. 30, 2023. Carrols also owns and operates 60 Popeyes restaurants in six states.

Transaction rationale

The transaction is part of Burger King’s Reclaim the Flame plan to “accelerate” sales growth and “drive franchisee profitability,” per the announcement.

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 “modern image” over the next five years. To accomplish this, the team plans to invest about $500 million of capital, funded by Carrols’ operating cash flow, to remodel about 600 acquired restaurants that are not currently considered “modern image.”

“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,” Tom Curtis, president of Burger King U.S. and Canada, said in the release. “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.”

“Today’s announcement is a testament to our more than 24,000 Carrols team members who have helped drive the company to record levels of profitability over the past 12 months,” Deborah Derby, President and CEO of Carrols said. “These results have allowed us, through this transaction, to deliver immediate and certain value to Carrols 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.”