Exclusive: Chipotle
builds team to defend against activist investor Ackman -
sources
Send a link to a friend
[October 28, 2016]
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.
![](http://archives.lincolndailynews.com/2016/Oct/28/images/ads/current/stacy_sda_101816.png)
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.
Chipotle in September said it welcomed Pershing Square's investment and
appreciated its confidence in the company.
![](http://archives.lincolndailynews.com/2016/Oct/28/images/ads/current/pestcontrol_bch_termites.png)
[to top of second column] |
![](../images/102816pics/busine32.jpg)
William Ackerman, CEO and Portfolio Manager of Pershing Square
Management, is pictured during the Harbor Investment Conference in
New York, U.S. on February 13, 2013. REUTERS/Shannon Stapleton/File
Photo
![](../images/ads/current/demay_inv-lda081412.png)
Since then, Pershing Square and Chipotle have met at least once and have
had telephone conversations, two people familiar with the matter said.
They declined to discuss what the two sides have said to each other.
People familiar with Ackman's thinking have suggested that he believes
Chipotle's long-serving board is due for an overhaul, and that it needs
to beef up its marketing, cost controls and information technology.
Ackman has been relatively quiet about his latest investment and the
company's share price has not moved in his favor. After the initial
uptick following news of his stake, shares have fallen nearly 10
percent.
Activist-oriented hedge funds such as Pershing Square have been hit hard
by redemptions, with investors pulling roughly 5 percent in capital this
year alone, cutting assets under management to about $116 billion,
divided among some 78 activist funds, data from Hedge Fund Research
shows.
(Reporting by Svea Herbst-Bayliss and Lisa Baertlein; Editing by Peter
Henderson, Greg Roumeliotis and Lisa Shumaker)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/rohlfs_lda_051513.png) |