Arcos Dorados shares soar 25% after IPO
April 14, 2011, 4:36 p.m. EDT
Arcos Dorados shares soar 25% after IPO / By William Spain, MarketWatch
CHICAGO (MarketWatch) — Shares of Arcos Dorados Holdings Inc. soared more than 25% Thursday, rallying as investors embraced an initial public offering made by the Buenos Aires, Argentina-based McDonald’s franchisee.
The shares — which came out of the gate priced at $17, above their expected range of $13 to $15 — traded up $4.28 to $21.28. The company /quotes/zigman/4725620/quotes/nls/arco ARCO -1.41% sold 73.4 million shares in the offering.
The company runs McDonald’s franchises through Latin America and ranks as the largest franchisee of McDonald’s Corp. /quotes/zigman/233369/quotes/nls/mcd MCD +0.82% restaurants in the world, in terms of sales and restaurant count. It’s also the biggest fast-food chain in Latin America and the Caribbean, with units in 19 countries and territories.
Four years ago, McDonald’s sold almost all of its 1,600 restaurants in the market to Woods Staton, former president of McDonald’s Latin America South division, as well as a group of investors for $700 million. They assumed ownership of about 1,100 McDonald’s-owned restaurants and became the franchiser for 500 others.
McDonald’s outlets have been steady performers during the economic downturn as consumers “trade down” from pricier restaurant fare. The company also has been aggressively adding new items to its menus, many with local flavors, while expanding hours and benefiting from reduced pressure on labor costs.
Shares of McDonald’s, part of the Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA +0.92% , traded slightly higher to $77.11.
Bank of America Merrill Lynch, J.P. Morgan, Morgan Stanley, Itau BBA and CitiGroup are acting as joint book-runners for the Arcos Dorados offering.
William Spain is a MarketWatch staff writer in Chicago.
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