Basis Of Presentation (Notes)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis Of Presentation

Business Description

At March 31, 2024, Carrols Restaurant Group, Inc. ("Carrols Restaurant Group") operated, as franchisee, 1,023 Burger King® restaurants in 23 Northeastern, Midwestern, Southcentral and Southeastern states and 59 Popeyes® restaurants in six Southeastern states. Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its direct and indirect wholly-owned subsidiaries Carrols Corporation and New CFH, LLC and their wholly-owned subsidiaries. Carrols Corporation's material direct and indirect wholly-owned subsidiaries include its wholly-owned subsidiary Carrols LLC, a Delaware limited liability company. New CFH LLC's material direct and indirect wholly-owned subsidiaries include Frayser Quality, LLC and Nashville Quality, LLC (and together with New CFH, LLC's immaterial direct and indirect subsidiaries, collectively, "New CFH"). Unless the context otherwise requires, Carrols Restaurant Group and its direct and indirect wholly-owned subsidiaries are collectively referred to as the "Company."

Merger Agreement

On January 16, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Restaurant Brands International Inc. ("RBI") and BK Cheshire Corp., a Delaware corporation and subsidiary of RBI (“Merger Sub”, and together with RBI, the “Buyer Parties”), providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “Merger”).

A special transaction committee (the “Special Committee”) of independent and disinterested members of the Company’s board of directors (the “Board”) unanimously recommended that the Board approve and adopt the Merger Agreement and the transactions contemplated thereby and recommend that the stockholders of the Company adopt the Merger Agreement. Thereafter, the Board approved and adopted the Merger Agreement and resolved to recommend that the stockholders of the Company adopt the Merger Agreement. Subject to the terms and conditions and certain exceptions set forth in the Merger Agreement, each share of the Company's common stock, par value $0.01 per share, outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will, at the Effective Time, automatically be converted into the right to receive $9.55 in cash, without interest, subject to any required tax withholding.

If the Merger is consummated, the Company's common stock will be delisted from The NASDAQ Global Market and deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as promptly as practicable following the Effective Time. The Merger is expected to close in the second quarter of 2024 subject to the conditions set forth below.

Consummation of the Merger is subject to certain conditions set forth in the Merger Agreement, including, but not limited to, the: (A) affirmative vote of the holders of (i) a majority of all of the outstanding shares of Company capital stock to adopt the Merger Agreement and (ii) a majority of all of the outstanding shares of the Company's common stock held by the Unaffiliated Company Stockholders (as defined in the Merger Agreement) to adopt the Merger Agreement; (B) expiration or termination of any waiting periods (and any extensions thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (C) absence of any law or order in the United States restraining, enjoining or otherwise prohibiting the Merger; and (D) absence of a Company Material Adverse Effect (as defined in the Merger Agreement).

The Merger Agreement contains certain termination rights for the Company, on the one hand, and the Buyer Parties, on the other hand. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay RBI a termination fee of $19.0 million. In addition to the foregoing termination rights, and subject to certain limitations, the Company or RBI may terminate the Merger Agreement if the Merger is not consummated by November 30, 2024.

On April 12, 2024, notice was given that a special meeting of stockholders (the “Special Meeting”) of Carrols Restaurant Group will be held on May 14, 2024, to consider and vote on a proposal to adopt the Merger Agreement and a proposal to approve, on an advisory basis, the compensation that will or may become payable by Carrols Restaurant Group to its named executive officers in connection with the Merger.