McDonald’s China and Hong Kong operations are set to be sold for more than $2 billion to Citic, a state-owned conglomerate, and the Carlye Group, a private equity firm, the company announced Monday.
The $2.08 billion deal will give both companies franchise rights for 20 years, The New York Times reported.
Citic and its investment arm, Citic Capital, will have a 52 percent stake in the company, while Carlyle will take a 28 percent stake. McDonald’s will maintain 20 percent of the company.
This means that about two-thirds of the 2,640 McDonald’s franchises in China, including 240 in Hong Kong, will be refranchised, the Los Angeles Times noted.
“China and Hong Kong represent an enormous growth opportunity for McDonald’s,” Steve Easterbrook, McDonald’s chief executive, said in a news release, per the New York Times.
“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,” Easterbrook added.
The deal still needs to be approved by regulators, which is expected to be done by mid-2017, the LA Times noted.
Oak Brook, Ill.-based McDonald’s and its partners plan to add 1,500 more restaurants in China and Hong Kong during the next five years.
“As disposable incomes rise, people will continue to spend more on leisure and on dining out, and there is particularly great growth potential in tier three and four cities,” Oak Brook’s announcement said, according to the LA Times. “As such, the market for Western Quick Service Restaurants is expected to continue to grow rapidly.”
McDonald’s has recently turned its focus to shifting restaurants to franchisees, which enables the company to cut down on expenses that include paying large staffs and managing other operations, USA Today noted.
McDonald’s China and Hong Kong operations employ more than 120,000 people.
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