Starbucks Explores Chipotle Takeover as Shares Rise and Financing Questions Grow

Starbucks has worked with advisers in recent months on a possible takeover proposal for Chipotle Mexican Grill, according to Bloomberg. The reported work concerns a potential bid, not an announced agreement.

There is a direct connection between the companies at the top. Starbucks CEO Brian Niccol led Chipotle until two years ago, n-tv.de - Wirtschaft reported. That gives him firsthand knowledge of the burrito chain.

Coverage on October 8 brought the exploratory work into public view. CNBC International reported that Starbucks had been working with advisers on a takeover proposal and examined the potential advantages and drawbacks for investors.

Chipotle shares rose following the takeover report, according to Forbes. The supplied coverage does not give the size of that increase.

Starbucks then said it was focused on its turnaround plan, NBC News reported on October 8. That response puts its existing business priorities alongside the reported interest in Chipotle, but does not establish whether the exploratory work is continuing.

Financing also emerged as a concern in the October 8 coverage. MarketWatch reported that Starbucks investors would likely be unhappy with additional debt to fund a purchase, given the company's already high debt load.

The situation remains exploratory, with no formal agreement announced. The reporting describes work on a potential proposal, while Starbucks' public response stresses its turnaround, according to NBC News.

A purchase would bring together two of the most recognizable restaurant brands, CBS Top Stories reported. But the coverage provides no agreed price, financing plan or timetable for a transaction.

The next substantive development would be confirmation of whether Starbucks intends to make a formal proposal. Its stated focus on the turnaround leaves that question unresolved in the coverage from NBC News.

If a proposal emerges, how Starbucks would pay for it will be central. The debt concerns reported by MarketWatch identify a specific obstacle to winning investor support, rather than evidence that a deal cannot happen.