Carrols to buy 278 Burger King restaurants

MIAMI (AP) -- Burger King Corp. said Monday that Carrols Restaurant Group Inc. is buying 278 of the fast-food chain's company-owned restaurants for $15.8 million plus a stake in its company.

Carrols is the largest Burger King franchisee in the U.S. It is buying restaurants in Ohio, Indiana, Kentucky, Pennsylvania, North Carolina, South Carolina and Virginia and will hold 575 of the company's restaurants when the deal is complete.

The deal is contingent upon Carrols completing its spinoff of its Fiesta Restaurant Group Inc. business, which operates Pollo Tropical and Taco Cabana restaurants. That process is expected to be done in April and will help fund the deal.

Carrols said that with the spinoff nearly complete, it wants to increase its focus on building its Burger King franchise business. The company has agreed to give Burger King $15.8 million in cash and a 28.9 percent equity stake in Carrols, following the spinoff. The cash includes refranchising fees, inventory and other costs. Carrols also agrees to remodel roughly 450 stores over the next three and a half years as part of the brand's plan to improve its restaurant image.

Burger King's president of its North American business, Steve Wiborg, and its chief financial officer, Daniel Schwartz, will join Carrols' board of directors.

Carrols, based in Syracuse, N.Y., has operated Burger King restaurants since 1976. Its shares jumped $1.46, or nearly 12 percent, to $13.99 in afternoon trading.

Privately-held Burger King is based in Miami and has more than 12,500 locations worldwide. It is the third-largest burger chain in the U.S. after recently being unseated from its No. 2 spot by the Wendy's chain.