Carlyle Group one of two bidders for McDonald’s China franchise
August 29, 2016 Category Mergers & Acquisitions, Weekly
U.S. private equity fund Carlyle Group may be one of the two final bidders left standing in a competitive auction process that will see the fund buy out U.S. fast food chain McDonald’s China franchise of 2,200 restaurants for more than USD2 billion. The deal comes as McDonald’s, which first expanded into China via an outlet opened in Shenzhen in 1990, announced in March it was looking to restructure its holdings in Asia. The fast food chain is seeking to reduce its physical ownership of restaurants in Asia, and would like to convert its strategy into an asset-light, franchise-focused model.The current sale will give the successful buyer a 20-year master franchise agreement, which comes with options to extend for 10 years upon expiry. Carlyle, along with one other unnamed multinational company, has outbid other interested U.S. and Chinese buyers in the preceding auction rounds. China Cinda Asset Management, Chinese food group Sanyuan, technology company Sanpower Group and local hotel operator GreenTree Management were among the companies invited to submit offers in the second round of the bidding process. McDonald’s current sale of its China franchise has come as Yum Brands, the company behind KFC and Pizza Hut, is also seeking to spin off its China business with an initial public offering (IPO). Yum’s Chief Executive Greg Creed said the move will give the brand greater stability in its earnings, the South China Morning Post reports.
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