Exclusive: Chipotle builds team to defend against activist investor Ackman - sources

Thu Oct 27, 2016 10:13pm EDT
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By Svea Herbst-Bayliss and Lisa Baertlein

BOSTON/LOS ANGELES (Reuters) - Chipotle Mexican Grill Inc has turned to high-profile investment bankers and lawyers to help defend against activist investor William Ackman, according to two people familiar with the matter on Thursday.

Investment banks Goldman Sachs Group Inc and Morgan Stanley, as well as law firm Wachtell, Lipton, Rosen & Katz LLP, are now working for the U.S. restaurant chain, the people said. Chipotle has also hired crisis public relations firm Joele Frank, they added.

Neither Ackman nor his New York-based hedge fund, Pershing Square Capital Management LP, have publicly made any demands of Chipotle after becoming its second-largest shareholder last month.

Billionaire Ackman is known for buying stakes in publicly traded companies and trying to force changes ranging from removing board members to selling off large parts of the company.

The sources asked not to be identified because the assignments are not public. Wachtell and Chipotle did not return calls seeking comment, Morgan Stanley, Goldman Sachs and Joele Frank declined to comment on Thursday.

In early September, Pershing Square said in a regulatory filing that it has a 9.9 percent stake in Chipotle, becoming its biggest shareholder after Fidelity Investments.

Chipotle is struggling to revive sales after a string of food borne illness outbreaks last year sent its shares tumbling. As a result, Chipotle on Tuesday posted another dismal quarterly earnings performance.

Executives have vowed to make the chain leaner and more efficient. They have laid out plans for long-overdue investments in digital ordering and payments, deeper cost cuts, and said they would pursue strategic alternatives for its 15-unit ShopHouse Southeast Asian Kitchen chain.   Continued...

A Chipotle Mexican Grill is seen the day before it announces its first quarter results, in Los Angeles, California, United States, April 25, 2016. REUTERS/Lucy Nicholson