Industry News | October 26, 2005

Chipotle Spin-off Now in Motion

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McDonald's Corp. has made a long-anticipated filing with the Securities and Exchange Commission to make its Denver Chipotle Mexican Grill restaurant chain a separate, publicly held company, the Denver Business Journal reported.

McDonalds, of Oak Brook, Illinois, made the filing yesterday, saying it expects to raise as much as $100 million from the Chipotle spin-off.

Chipotle plans to trade on the New York Stock Exchange using the symbol CMG.

But the fast-food giant didn't say Tuesday how many shares will be sold or at what price, or how much of a stake McDonald's will hold in Chipotle after the IPO. McDonald's currently owns 92 percent of the Colorado company.

The rest of Chipotle is owned by 43 other investors, including founder and CEO Steve Ells. Ells launched Chipotle in 1993.

The fast-casual restaurant chain currently has more than 450 restaurants nationwide.

Chipotle will use the proceeds from its offering largely to repay a $30 million credit line with McDonald's, open new restaurants and update existing locations. The Morgan Stanley and SG Cowen & Co. investment banks are managing the IPO.

The Mexican restaurant chain has done well recently, increasing net earnings for 2005's first half to $28.4 million from $5.5 million for the same period a year earlier. Chipotle boosted 2004 sales to $430 million, a 34 percent jump from 2003.