McDonald's Franchisee IPO: Arcos Dorados
By Miriam Reimer - 04/15/11 - 11:27 AM EDT
NEW YORK (TheStreet) -- Arcos Dorados Holdings
Arcos Dorados' boisterous opening prompted stake-owning investment groups to unload more shares than initially planned -- about 64 million shares, compared with 50 million. Argentina-based Arcos Dorados is McDonald's largest franchisee by sales and number of locations. As of the end of 2010 it operated 1,755 restaurants in 19 countries, including in its native Argentina, Mexico and Brazil. Arcos Dorados originally planned to to sell around 62.5 million shares in the $13 to $15 range, using around $150 million of the net proceeds for capital expenditures like opening new restaurants and remodeling existing ones, according to early reports in March. In 2010 it grew revenue 14.1% year-over-year to $3.02 billion. Net income soared 32.2% to $106.3 million. Arcos Dorados accounts for around 5% of global dollars spent at McDonald's restaurants.
McDonald's shares traded less than 0.1% lower at $76.85 Thursday morning.
For Arcos Dorados and other upcoming IPOs, international markets represent huge expansion potential for U.S.-based restaurant companies. In early March, before the devastating earthquake and tsunami hit, McDonald's Japan said that same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- jumped 4.3% last month, the third consecutive monthly gain. In February McDonald's reported strong January same-store sales on strength in China and Europe.
"China is a major focus and the stock has a potential longer term to have a higher multiple as the China story unfolds, similar to what Yum! Brands
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