McDonald's To Sell 80% Business In Hong Kong And Mainland China For $2.08 Bln

(RTTNews) - McDonald's Corp. (MCD) announced that it has agreed to sell its 80 percent of its mainland China and Hong Kong business to a consortium of Citic Group Corp. and Carlyle Group (CG) for up to $2.08 billion or about HK$16.14 billion, which will be settled by cash and new shares.

After completion of transaction, CITIC and CITIC Capital will have controlling stake of 52%, while Carlyle and McDonald's will have interests of 28% and 20%, respectively.

Upon completion, the new company will have a board of directors with representatives from CITIC, CITIC Capital, Carlyle and McDonald's. McDonald's existing management team will continue to lead the business.

CITIC Limited, CITIC Capital Holdings, The Carlyle Group and McDonald's announced formation of partnership and company that will act as the master franchisee responsible for McDonald's businesses in mainland China and Hong Kong for 20 years.

The partnership will accelerate growth in McDonald's business through new restaurant openings and to improve sales performance in existing restaurants. It intends to add over 1,500 restaurants in China and Hong Kong over the next five years.

For Carlyle, this investment offers the chance to partner with an iconic brand with sizeable market share and growth potential in China.

X.D. Yang, Managing Director and Co-Head of the Asia buyout team of The Carlyle Group, will serve as Vice Chairman of the board of the new company.

Yichen Zhang, Chairman and CEO of CITIC Capital, will serve as Chairman of the board of the new company.

As part of its turnaround plan announced in May of 2015, McDonald's committed to refranchising 4,000 restaurants by the end of 2018, with the long-term goal of becoming 95% franchised. As a result of this transaction, McDonald's is refranchising more than 1,750 company-owned stores in China and Hong Kong.