Starbucks Explored Chipotle Takeover, FT Reports
SBUX sits 16% above its 52-week low of $77.99.
Summary
Starbucks has explored a takeover of Chipotle Mexican Grill, according to the Financial Times. Chipotle shares jumped 7.2% and Starbucks fell 4.4% after the report; Chipotle's market value was about $41 billion and Starbucks about $102 billion. Starbucks has worked with advisers in recent months on a possible proposal for Chipotle. A deal would surpass Burger King's $11.4 billion acquisition of Tim Hortons in 2014 and could create the largest deal in restaurant industry history. The combined company generated nearly $50 billion in sales last year, with Starbucks operating about 41,000 stores and Chipotle roughly 4,200 restaurants. Analysts noted limited obvious revenue synergies despite potential cost savings, and the discussions could ultimately fail to produce a transaction. The report does not specify deal terms, timing, or whether talks are active. A combination would create a massive fast-casual and coffee giant, but the strategic rationale is unclear given Starbucks' recent focus on its core turnaround and store closures. This follows Starbucks' strong Q3 and its 'Back to Starbucks' restructuring, suggesting a potential shift in capital allocation priorities. No comment from either company has been reported.
Updated with a dpa-AFX report · What changed
Updates
· dpa-AFX — Chipotle shares jumped 7.2% and Starbucks fell 4.4% after the report; Chipotle's market value was about $41 billion and Starbucks about $102 billion.
- Deal Status — Starbucks has worked with advisers in recent months on a possible proposal for Chipotle. The discussions could ultimately fail to produce a transaction.
- Deal Size — The potential deal could create the largest deal in restaurant industry history and would surpass Burger King's $11.4 billion acquisition of Tim Hortons in 2014.
- Combined Scale — The combined company generated nearly $50 billion in sales last year, with Starbucks operating about 41,000 stores and Chipotle roughly 4,200 restaurants.
- Synergies — Analysts noted limited obvious revenue synergies despite potential cost savings for the deal.
All 7 details
- The potential deal could create the largest deal in restaurant industry history.
- Starbucks has worked with advisers in recent months on a possible proposal for Chipotle.
- A deal would surpass Burger King's $11.4 billion acquisition of Tim Hortons in 2014.
- The combined company generated nearly $50 billion in sales last year.
- Starbucks operates about 41,000 stores and Chipotle roughly 4,200 restaurants.
- Analysts noted limited obvious revenue synergies despite potential cost savings for the deal.
- The discussions could ultimately fail to produce a transaction.
At the time of this announcement, SBUX was trading at $90.16 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $102.8B. The 52-week trading range was $77.99 to $110.51. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Reuters.