Fast food giant McDonald’s Corp. (NYSE:MCD) is off-loading the bulk of its business in China and Hong Kong in a US$2bn deal designed to beef up expansion without using much of its own capital.
State-backed Chinese conglomerate CITIC Ltd and US private equity firm Carlyle Group LP are paying up to US$2.1bn for a 20-year partnership deal.
The US restaurants chain said local partners will help it speed up growth in the world’s second biggest economy by accelerating openings, particularly in smaller cities.
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 restaurants in the two areas over the next five years.
Fries with that …
Under the deal, Hong Kong-listed CITIC Ltd will directly own about 32% of the business, with an affiliate company, CITIC Capital holding another 20 percent.
Carlyle will control 28% of the venture, while McDonald’s will retain a 20% stake.
The partnership will also aim to boost sales at existing restaurants, with menu innovation a key focus.
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.
Story by ProactiveInvestors