US company Carrols Restaurant Group has entered a definitive agreement and plan of merger with Cambridge Franchise Holdings to purchase 166 Burger King and 55 Popeyes restaurants in ten states for a value of $238m.

As part of the transaction, Cambridge will receive around 7.36 million shares of Carrols common stock and will own up to 16.6% of Carrols’ outstanding common shares at closing.

The transaction value also includes approximately $100m of net debt assumed from Cambridge, which is likely to hold approximately 24% equity interest in Carrols after converting preferred stocks of Cambridge and Burger King (BKC) to common stock.

In addition, Carrols expects to refinance Cambridge’s debt, as well as its existing debt through a new senior secured credit facility. This will enable a term loan and revolving credit borrowings under a fully committed financing, which is provided by Wells Fargo Bank, National Association and arranged by Wells Fargo Securities.

“The transaction value also includes approximately $100m of net debt assumed from Cambridge.”

As part of the merger, Carrols has also signed a new area development and remodelling agreement with BKC to expand BKC’s right of first refusal (ROFR) held by Carrols.

This new agreement will allow Carrols to buy up to 500 additional Burger King restaurants, as well as expand its ROFR territory to other locations in Arkansas, Louisiana, Mississippi, and Tennessee.

As part of the previously signed ROFR, Carrols is pre-approved to expand until it opens around 1,000 Burger King restaurants in 20 US states.

Under the newly extended agreement, Carrols will develop 200 new Burger King restaurants over the next six years, as well as remodel or upgrade certain locations.

Furthermore, the acquisition will offer Cambridge the right to designate up to two director nominees following its completion.