Why McDonald’s Corporation (MCD) Should Acquire Chipotle Mexican Grill, Inc. (CMG)?

McDonald’s Corporation (NYSE:MCD)’ sales have not been up to mark for quite some time. Though the company has had growth in other parts of the world, its U.S. sales are just not growing. This year even growth in other parts of the world suffered for McDonald’s Corporation (NYSE:MCD) owing to the expired meat scandal the company faced in China. In the U.S., the obesity concerns have made food from McDonald’s Corporation (NYSE:MCD) a strict no-no for many. Doug McIntyre, Editor of 24/7 Wall Street, feels in such times inorganic growth is the most viable option for McDonald’s Corporation (NYSE:MCD) to grow. He discussed why McDonald’s Corporation (NYSE:MCD) should by Chipotle Mexican Grill, Inc. (NYSE:CMG) back on CNBC, recently.

McDonald's Corporation (MCD)

“McDonald’s Corporation (NYSE:MCD) as you know has a tremendous balance sheet and generates so much cash that it has been buying back its own stock  and issuing higher and higher dividends. So, they have the capital to be able to do it,” McIntyre said.

McIntyre feels that if McDonald’s Corporation (NYSE:MCD) has to buy Chipotle Mexican Grill, Inc. (NYSE:CMG), it will need to shell out at least $25 to $30 billion on the acquisition based on the current market cap of the company. He believes that Chipotle Mexican Grill, Inc. (NYSE:CMG) is an ideal target for McDonald’s Corporation (NYSE:MCD) as not only does it have a large presence across the U.S., but it is also one of the remaining fastest growing companies in the restaurant business.

McIntyre thinks that if Subway would have been a public company or if it would have been open for a sale, it would have been a ‘holy grail’ for McDonald’s Corporation (NYSE:MCD) in terms of acquisition. He believes that an acquisition can benefit McDonald’s Corporation (NYSE:MCD) only if it’s a large company like Chipotle Mexican Grill, Inc. (NYSE:CMG) or Subway, as smaller companies don’t have the necessary size to compliment that of McDonald’s Corporation (NYSE:MCD);s.

Disclosure: None

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