McDonald’s Corp. said Wednesday it would part with its remaining stake in Chipotle Mexican Grill restaurants, selling five million more shares in the next two months and completely exiting by the end of the year.
McDonald’s, the world’s largest fast-food company that has revitalized restaurant sales with a turnaround strategy which included new products, extended hours and cashless payments, said it would use the proceeds from the five million Chipotle shares to buy back its own stock.
In effort to focus on its flagship chain, McDonalds will shed its remaining shares in Chipotle Mexican Grill and use the proceeds for a stock buyback program.
In effort to focus on its flagship chain, McDonalds will shed its remaining shares in Chipotle Mexican Grill and use the proceeds for a stock buyback program.The company then plans a tax-free exchange of the remaining Chipotle stock for McDonald’s shares later in 2006, completing the divestment of its stake in the Mexican food grill that began earlier this year.
While McDonald’s has revitalized sales with its three-year turnaround plan, management nonetheless has been forced to defend its strategy in response to criticism by an investor, hedge fund Pershing Square Capital Management.
For months Pershing pressed McDonald’s to spin-off some company-owned restaurants — a move management said would not create any more value for shareholders than the current business plan.
But management has pledged to return capital to investors, and will return even more with the Chipotle deal.
McDonald’s, which has more than 30,000 restaurants, spun off Chipotle in an initial public offering in January that raised more than $170 million. It currently owns about 69 percent of that chain
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