According to the Financial Times, Starbucks is exploring the acquisition of Chipotle Mexican Grill, which would be the largest purchase of one restaurant chain by another in the U.S. Chipotle has a market capitalization of about $40 billion, meaning Starbucks would likely need to offer $50 billion with a standard 20% acquisition premium. While Wall Street firm William Blair estimated about $300 million in potential annual savings, analysts consider this insufficient to justify such a massive deal. Brian Niccol, currently Starbucks CEO, previously turned Chipotle around and doubled its annual sales to $10 billion, but investors worry that such an acquisition would distract from Starbucks’ ongoing turnaround plan. The stock market has effectively concluded the deal is unlikely to happen, with shares in both companies returning to their pre-article levels.
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