McDonald’s Corp has agreed to sell the bulk of its China and Hong Kong business to state-backed conglomerate CITIC Ltd and Carlyle Group LP for up to $2.1 billion (Dh7.71 billion), seeking to expand rapidly without using much of its own capital.
The 20-year deal caps months of negotiations between the fast-food chain, private equity firms including Carlyle and TPG Capital Management LP as well as several Chinese suitors.
The US fast food chain said local partners will help speed up growth in the world’s No. 2 economy through new restaurant openings, particularly in smaller cities that are expected to benefit from increased urbanisation and income growth.
“McDonald’s globally overall is struggling and didn’t have the money or intellectual resources to focus on China,” said Shaun Rein, managing director at China Market Research Group.
The company has more than 2,400 restaurants in mainland China and roughly 240 in Hong Kong. The new partnership plans to add 1,500 in the two areas over the next five years
Under the deal, Hong Kong-listed CITIC Ltd will own about 32 per cent of the business, with CITIC Capital, an affiliate company that manages private equity funds and other alternative assets, holding another 20 per cent.
Carlyle will control 28 per cent of the business, while McDonald’s will retain a 20 per cent stake, the companies said in a statement. The deal will be settled in cash and in shares in the new company that will act as the master franchisee for the 20-year period.
McDonald’s originally wanted to raise up to $3 billion from the sale of the business, but later decided to keep a minority stake to benefit from exposure to future growth in China, a person with direct knowledge of the plans previously told Reuters.
The partnership will also aim to boost sales at existing restaurants, with menu innovation a key focus. Fast-food firms including McDonald’s and Yum Brands Inc are recovering from a series of food-supply scandals in China that have undermined their performance.
“I’m not sure how much more you can do with McDonald’s in China. They’re a well-run company, so I’m not sure that CITIC and Carlyle are able to add that much more aside from capital,” Rein said.
McDonald’s said in March it was reorganising operations in the region, looking for strategic partners in China, Hong Kong and South Korea. The company later decided to keep its South Korea business.
Other companies that had bid for the China and Hong Kong assets included TPG, which teamed up with mini-market operator Wumart Stores Inc, and real estate firm Sanpower Group Co Ltd, which owns British department store House of Fraser Ltd, sources have said.
JPMorgan Securities is advising the buyer group, while CITIC Ltd also said it hired CITIC CLSA Capital Markets as its financial adviser and CITIC Securities as financial adviser in China. McDonald’s hired Morgan Stanley to run the sale
source : gulfnews
GMT 09:06 2018 Friday ,21 September
West dissatisfied with development of industry in Russia and ChinaGMT 08:11 2018 Tuesday ,23 January
Davos-bound bosses very upbeat on world economyGMT 09:37 2018 Saturday ,20 January
US 'erred' in supporting WTO membership for China, RussiaGMT 14:40 2018 Sunday ,07 January
CPEC to create huge opportunities, transform regional peace, prosperityGMT 08:19 2018 Wednesday ,03 January
China boosts investment in Sri Lankan mega-projectMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor