McDonald’s China deal done
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A private-equity led consortium has been chosen to buy 20-year franchise rights for McDonald’s China and Hong Kong, Reuters is reporting.
The successful bidder is a consortium led by private-equity firm Carlyle Group and Chinese conglomerate Citic Group, who will pay up to US$3 billion, according to an unidentified source who spoke with Reuters.
A contract will likely be signed before Christmas.
As reported in September, consortiums led by private equity firms Carlyle Group and TPG Capital were shortlisted as the bidding process narrowed the field. TPG had teamed with Beijing Capital Agribusiness Group, McDonald’s current China partner.
Another private equity group, Bain Capital, had already dropped out.
McDonald’s had previously said it was looking for long-term partners rather than private equity firms, which typically cash out after a few years.
The deal covers some 2400 restaurants in China and Hong Kong. The 20 year franchise rights come with a 10-year renewal option.
Questions & Answers
Q.Which companies are part of the consortium buying the McDonald's franchise rights?
Which companies are part of the consortium buying the McDonald's franchise rights?
The successful bidder is a consortium led by the private-equity firm Carlyle Group and the Chinese conglomerate Citic Group. They were chosen to acquire the 20-year franchise rights.
Q.How much is the winning consortium paying for the McDonald's China and Hong Kong rights?
How much is the winning consortium paying for the McDonald's China and Hong Kong rights?
The Carlyle Group and Citic Group consortium will pay up to US$3 billion for the 20-year franchise rights. This figure comes from an unidentified source who spoke to Reuters.
Q.What kind of partnership was McDonald's originally seeking for its China and Hong Kong operations?
What kind of partnership was McDonald's originally seeking for its China and Hong Kong operations?
McDonald's had previously stated its preference for long-term partners, as opposed to private equity firms. Private equity firms typically cash out their investments after a few years.
Q.How many restaurants are covered by this new franchise agreement?
How many restaurants are covered by this new franchise agreement?
The deal covers approximately 2,400 McDonald's restaurants across China and Hong Kong. It grants 20-year franchise rights with an option to renew for an additional 10 years.
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