Oh so they do know how to make a deal after all huh. After over five years of not ratifying a union contract, Starbucks is finally looking to put pen to paper… to acquire Chipotle. The burrito place. The one where Starbucks CEO Brian Niccol used to work.
Sprudge has previously taken a stance against referring to coffee as a bean. We will be putting a stay on that for the remainder of this article.
As reported by Financial Times, Starbucks has been working with advisors for the past few months trying to put together a deal to buy the fast food chain currently valued at $41 billion. If it goes through, it would be the largest restaurant acquisition of all time.
Though Niccol is best known as the current and former CEO of the two brands, Financial Times suggests the move may stem from his career before that. Niccol was previously an executive as fast food conglomerate Yum Brands, the umbrella company that owns KFC, Taco Bell, and until recently Pizza Hut. The Chipotle acquisition may be the first step in building another fast food empire.
“It would also stand out as the latest megadeal in a mergers and acquisitions boom, as corporate America tries to take advantage of the light-touch antitrust regulation under US President Donald Trump,” per FT, which is really quite a sentence.
One analyst they spoke with states that the merger creating a combined company with nearly $50 billion in annual sales has “no obvious revenue synergies.” But there are synergies here. Niccol’s strategy is easily understood when seen in one of two lights. The first and most obvious is simply, more beans. All the time more beans. The bean portfolio must be girded by diversification. His middle name must be Jack because Niccol is all about that bean stock.
The second is less straightforward and would require a second acquisition, of a high-end bathroom fixture brand like Toto or Kohler. Because once these two behemoths of bathroom breaks join forces at their combined 20,000 locations in the US alone, there’s a lot of money to be made in comfort facilities. Perhaps this is Niccol’s real play here.
That or he’s looking to justify his continued supercommute between Starbucks’ Seattle corporate offices and Chipotle’s Newport Beach headquarters, where Niccol still lives.
Zac Cadwalader is the managing editor at Sprudge Media Network and a staff writer based in Dallas. Read more Zac Cadwalader on Sprudge.
