Business World

Sunday 20 August 2017

McDonald's China sells majority stake to Citic and Carlyle

A woman walks past a McDonald's outlet in Hong Kong. REUTERS/Tyrone Siu/Files Photo
A woman walks past a McDonald's outlet in Hong Kong. REUTERS/Tyrone Siu/Files Photo

Rachel Chang

McDonald's has agreed to sell a controlling stake in its China and Hong Kong operations to a group of financial investors in the latest effort by the world's largest fast-food chain to catch up with Western rivals by opening new stores in smaller Chinese cities. A consortium including Citic and Carlyle Group will buy an 80pc stake in a deal valuing the business at as much as $2.08bn (€1.97bn), according to a group statement.

McDonald's will retain a one-fifth share in the business, with the partnership planning to add more than 1,500 restaurants over the next five years in China's lower-tier cities.

The deal includes 20-year franchise rights.

McDonald's and rival Yum China Holdings, which owns the KFC and Pizza Hut brands in the mainland, are combating rising domestic competition as they fight to retain middle-class Chinese consumers who increasingly demand high-quality and healthier dining options.

The fast-food giant is also looking at further deals in markets such as South Korea, Japan and Southeast Asia as it streamlines its sprawling global operations.

"Citic and Carlyle's resources will allow McDonald's to expand rapidly and refurbish old restaurants, which is expensive to do," said Ben Cavender, a Shanghai-based analyst at China Market Research Group.

"Given that McDonald's lags behind KFC in terms of store count in China, we can expect them to expand aggressively and invest heavily."

Yum China Holdings and Starbucks plan to add about double the number of stores - as many as 3,000 in China - over the same period.

China's state-backed Citic and Citic Capital Partners will take a 52pc stake, while Carlyle will hold 28pc. (Bloomberg)

Irish Independent

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