Starbucks weighs takeover of Chipotle

· Finance · United States

Starbucks has reportedly been working with advisers on a takeover proposal for Chipotle, a deal analysts say carries both pros and cons for investors. Starbucks shareholders would likely be unhappy about the company adding debt to finance the purchase, given that it already carries a high debt load, according to commentary on the possible combination. The reports have prompted market speculation about whether a tie-up of the coffee chain and the burrito-and-bowl restaurant group makes strategic sense for either side. No deal terms, price or timeline were disclosed in the reports, and it remains unclear whether a transaction will materialize.

Why it matters：A large-cap restaurant merger of this kind would test investor appetite for leveraged consumer deals at a moment when financing costs and balance-sheet discipline are under scrutiny.

Key points

  • Starbucks reportedly worked with advisers on a Chipotle takeover proposal
  • Analysts said Starbucks' already high debt load would likely upset shareholders
  • No deal terms or timeline have been disclosed

Sources (original reporting)

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