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    McDonald's Agrees to Sell 80% of China Business to Chinese-US Consortium

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    The US-based McDonald's fast food chain company has agreed to sell 80 percent of its China and Hong Kong business to an international Chinese-US consortium, the company announced on Monday.

    MOSCOW (Sputnik) — The agreement was reached between McDonald's, the Hong Kong-based CITIC Limited holding and the US-based The Carlyle Group asset management firm.

    "The total consideration payable by the new company to acquire McDonald’s mainland China and Hong Kong business is up to US$2.08 billion (approximately HK$16.14 billion). The consideration will be settled by cash and by new shares in the company issued to McDonald’s. After completion of the transaction, CITIC and CITIC Capital will have a controlling stake of 52%, while Carlyle and McDonald’s will have interests of 28% and 20%, respectively," McDonald's said in a statement.

    The agreement is expected to be closed in mid-2017 and has a duration of 20 years, the statement added, noting that the move is expected to boost the growth of the restaurant chain in China as well as increasing sales in existing fast food outlets.

    "China and Hong Kong represent an enormous growth opportunity for McDonald’s. This new partnership will combine one of the world’s most powerful brands and our unparalleled quality standards with partners who have an unmatched understanding of the local markets," McDonald’s CEO Steve Easterbrook was quoted as saying in the press release.

    McDonald’s, the world's largest fast food chain, announced plans to overhaul its business model in Asia in 2016. The plans, which involved seeking local partners for a franchise buyout in China, Hong Kong and South Korea, were a strategic response to the rise of Chinese fast food chains.

    In 2015, the hamburger chain announced plans to refranchise 4,000 restaurants within three years, with 1,750 of these in China and Hong Kong. The target is to run 95 percent of food outlets around the world under franchises.

    McDonald’s, founded in 1940, has over 36,000 outlets in over 100 countries. The franchise model involves independently operated restaurants under the brand name.

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    • avatar
      marcanhalt
      No job losses here. Hopefully, too, there was a clause in there regarding the quality of chicken nuggets sent to the US franchise drive throughs.
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