Key insights
- Chipotle (CMG) shares surged 7% on a Financial Times report that Starbucks (SBUX) is exploring a takeover bid. Such a deal would be the largest restaurant acquisition ever. Starbucks shares fell 4% on the news. The report noted the deal may not materialize. Starbucks CEO Brian Niccol previously led Chipotle. Chipotle has faced cost pressures and food recalls, while Starbucks has been undergoing a turnaround.
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Chipotle shares are surging on signs Starbucks could be poised to make a takeover bid.
Shares of Chipotle (CMG) were up 7% in recent trading, leading S&P 500 gainers, after the Financial Times reported Starbucks (SBUX) has been working with advisors to make an offer to acquire the burrito chain.1 Shares of Starbucks lost 4%.
Starbucks currently has a market capitalization just over $102 billion, while Chipotle’s hovers around $41 billion. Such a deal would mark the largest restaurant acquisition of all time, and the report warned it may not materialize.
A tie-up would also bring Starbucks CEO Brian Niccol back to Chipotle, which he spent six years leading before leaving for Starbucks’ top job in 2024. During his time at Starbucks, Niccol has overseen the early stages of a turnaround plan that has included revamping the chain’s menu and stores in an effort to win back customers and return the coffee giant to consistent sales growth.
Starbucks shares are up about 16% since the day before Niccol’s move was announced on Aug. 13, 2024, while Chipotle shares have lost roughly 40% of their value over the same period. Chipotle’s sales have shown signs of improvement this year, though the chain continues to face pressure from rising food and labor costs as well as the impact of food recalls.
Starbucks and Chipotle did not respond to Investopedia’s requests for comment in time for publication.