McDonalds’ Sells Most of China Business
McDonald’s Corp (MCD.N) is to sell the majority of its China and Hong Kong business to CITIC Ltd (0267.HK) and Carlyle Group LP (CG.O) for up to $2.1 billion.
The company currently operates more than 2,400 restaurants in China and around 240 in Hong Kong. The proposed partnership plans include developing a further 1,500 in the two areas over the next five years.
Shaun Rein, managing director at China Market Research Group noted “McDonald’s globally overall is struggling and didn’t have the money or intellectual resources to focus on China,”
Under the new partnership, CITIC Ltd will control 32 percent of the business, with CITIC Capital, an affiliate company will hold another 20 percent. Carlyle Group will control 28 percent, while McDonald’s will retain a 20 percent stake, the companies said in a released statement. The deal gives McDonald’s partners “who have an unmatched understanding of the local markets and bring enhanced capabilities”, Steve Easterbrook CEO said in the statement.
Last year the burger chain announced plans to sell its over 2,600 restaurants in China and Hong Kong, after sales declined as tensions in the South China Sea escalated, denting US companies’ earnings in the territory.
The China business suffered a blow in 2014 after a scandal involving food safety at one of its meat suppliers.
“McDonalds’ Sells Most of China Business “