McDonald’s Corp. will sell a minority stake in Denver-based Chipotle Mexican Grill early next year, the company said Wednesday.
Oak Brook, Ill.-based McDonald’s will file for an initial public offering in October and expects to launch the offering in the first quarter of 2006. The company did not disclose how much of Chipotle will be sold.
Analysts estimate Chipotle could be worth $800 million.
McDonald’s owns a 90 percent stake in the burrito chain. The rest is closely held by investors, including founder and chief executive Steve Ells.
“We’ve determined an initial public offering of a minority interest in this emerging, popular fast-casual brand is most appropriate,” McDonald’s chief executive Jim Skinner told analysts.
He said the deal would “optimize Chipotle’s potential and create additional value for McDonald’s shareholders.”
“Spinning off Chipotle makes sense,” said John Kornitzer, who oversees $6 billion in assets – including about 300,000 McDonald’s shares – at Kornitzer Capital Management in Shawnee Mission, Kan. “It can grow faster, and management can increase the focus on McDonald’s.”
Ells opened his first Chipotle on East Evans Avenue and South Gilpin Street near the University of Denver in 1993. Today, the company operates 460 restaurants and opens 100 new locations each year.
Chipotle employs 12,000 people, including 110 at its headquarters in Lower Downtown. Its systemwide sales increased 34 percent in 2004, and the restaurants had average sales volume of more than $1.2 million, according to estimates by Technomic Inc., a Chicago-based restaurant consulting firm.
McDonald’s shares fell $1.20, or 3.68 percent, to close at $31.42 Wednesday on the New York Stock Exchange.
Bloomberg News contributed to this report.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
