McDonald's Corporation MCD
The three reasons
- 1
McDonald's real estate is worth ~$46bn, ~94% of enterprise value, but trades like a restaurant stock
- 2
Separating McOpCo reveals a 60% EBITDA-margin real estate/royalty business that re-rates to 12.5-13.5x
- 3
Leveraged recap + buyback unlocks $45-50/share, a 37-52% premium to $33
Primary demands
- IPO 65% of McOpCo (the ~9,000 company-operated restaurants) at ~7x EBITDA
- Issue $14.7bn of CMBS-style financing secured against McDonald's real estate
- Use debt and IPO proceeds to repurchase ~316mm shares at $40/share
- Leave Pro Forma McDonald's as a pure real estate / franchise royalty company (PropCo + FranCo)
- Have McOpCo pay market rent and a market franchise fee, enforcing transfer pricing
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (9)
Notes
Landmark Ackman/Pershing Square thesis — first public McDonald's campaign, the deck that put Pershing on the map. Explicit sum-of-parts: splits McDonald's into Landlord (PropCo), Franchisor (FranCo) and Operator (McOpCo), argues reported consolidated financials understate margins because there is no transfer pricing for rent/franchise fee. Tone is conspicuously collaborative — deck opens by 'commending' management and notes McDonald's took the proposal seriously, not adversarial. Fred Turner quote on p22 ('Running a McDonald's is a 363-day-a-year business...') is used supportively, not as a gotcha. Section V rebuts management advisors' pushback ('PF McDonald's would trade like a restaurant stock') and is a good worked example of how to respond to the opposing valuation view. Page 48 pie chart ('Not a Restaurant Company', 63% real estate / 37% brand royalty) is the deck's money-line visual; page 49 comparable-company table is the valuation anchor. Visual execution is competent institutional — blue/yellow Pershing palette, diamond logo, clean type — but not editorial/Canadian-Pacific tier. Date set to mid-November 2005 per '30-day average trailing price as of 11/11/05' footnote; McOpCo IPO proposal was ultimately rejected by management in favor of a smaller buyback + real estate trust alternative.