Indianapolis hamburger chain Steak 'n Shake said late Thursday that a subsidiary of the company will merge with Western Sizzlin Corp.

Through the purchase, which was negotiated with both companies' boards of directors, Steak 'n Shake will become a wholly owned subsidiary of Western Sizzlin. Western Sizzlin is a Roanoke-based holding company that operates several different restaurants, including Western Sizzlin and Great American Steak & Buffet.

The acquisition is estimated at $38.8 million, or $13.67 a share, based on 2.8 million Western Sizzlin shares outstanding, according to a Steak 'n Shake news release.

The value also is based on the price of Steak 'n Shake's shares Thursday, which closed at $12, and on a special dividend payable to Western Sizzlin stockholders of record on Nov. 2 for 1.3 million shares of Steak 'n Shake common stock that Western Sizzlin owns. The dividend will be paid on Nov. 6, regardless of whether the shareholders own stock when the merger is effective, according to the release.

When the merger is complete, each Western Sizzlin share will be converted into the right to receive financial instruments worth $8.08 a share. The instruments, called debentures, will have a five-year term and pay an interest rate of 14 percent a year, according to the news release.

The merger's closing is subject to approval by Western Sizzlin shareholders. Company officials did not return a call requesting further information.