Starbucks said on Monday it is not buying Chipotle, ending days of takeover speculation. Chipotle shares dipped and Starbucks shares rose in early trading after the denial.
Starbucks denied on Monday that it is considering an acquisition of Chipotle Mexican Grill, a deal that would have been the biggest ever restaurant takeover. According to a Starbucks spokesperson: "Starbucks is not buying Chipotle."
Chipotle's stock was down more than 2% in premarket trading after the statement, while Starbucks shares were more than 1% higher. Reuters reported that Starbucks rose 1% in early trading, while Chipotle fell about 3%.
Where the rumors started
The Financial Times reported on Thursday that Starbucks had been working with advisers on a takeover proposal for Chipotle in recent months, citing people familiar with the matter. Earlier in October, Semafor reported that Chipotle had hired advisers to defend against activist investors or an unwanted takeover bid.
The reports moved both stocks. Reuters said Chipotle shares rose more than 7% and Starbucks fell about 3% after the Financial Times story.
Why investors reacted
Chipotle shares are down about 20% over the last year, which CNBC said made the chain a cheaper target. The burrito chain has a market capitalization of around $40 billion, according to Reuters.
Starbucks CEO Brian Niccol previously led Chipotle, and Chipotle investors were looking forward to a potential reunion with him. Starbucks shareholders, however, were largely concerned about an expensive distraction while the coffee chain is in the middle of its own turnaround.
Starbucks said its management is focused on its Back to Starbucks strategy. It aims to share fourth-quarter results and fiscal 2027 guidance later this month.
Sources: CNBC, Reuters via Investing.com
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