Monday 08 August 2022

Carlyle Consortium nears deal to buy McDonald’s China franchise

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McDonald’s Corp has picked a consortium led by private-equity firm Carlyle Group LP and Chinese conglomerate CITIC Group Corp to buy its Chinese mainland and Hong Kong stores, while keeping a minority stake in the business, according to US media reports on Tuesday.

The deal, valued at as much as $2 billion, is likely to be signed before Christmas.

An announcement could be made as early as next week, The Wall Street Journal reported.

The decision by McDonald’s to retain a stake of up to 25 percent lowered the price tag for the business from up to $3 billion expected previously, said a person familiar with the deal who declined to be identified because details are not public, Reuters reported.

McDonald’s wants exposure to future growth in the world’s second-largest economy which is why it decided to maintain the stake, the person said. The company will also keep for now its stores in South Korea, which it previously also wanted to sell, the person added.

A McDonald’s spokeswoman in Chinese mainland declined to comment. Carlyle declined to comment and CITIC did not immediately respond to a Reuters request for comment.

McDonald’s in March said it was reorganizing operations in the region, looking for strategic partners in Chinese mainland, Hong Kong and South Korea as it switches to a less capital-intensive franchise model.

The Oak Brook, Illinois-based McDonald’s owns most of its more than 2,800 restaurants in the three markets. It is offering a 20-year franchise to buyers with a 10-year extension option.

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