McDonald’s said on Monday it would acquire investment firm Carlyle’s 28 per cent stake in a partnership that manages its business in mainland China, Hong Kong and Macau, as the burger chain looks to simplify its structure in the region.
The deal will help McDonald’s raise its holdings to 48 per cent, while a consortium led by state-backed conglomerate CITIC will maintain its controlling ownership with a 52 per cent stake in the business.
Reuters reported in April that Carlyle was discussing various options with financial advisers for its stake in McDonald’s China, including setting up a continuation fund for the asset.
There was “no better time to simplify our structure” given the benefits of China’s long-term potential, McDonald’s CEO Chris Kempczinski said.
The move comes nearly six years after the burger chain agreed to sell 80 per cent of its China and Hong Kong businesses to CITIC, its investment arm CITIC Capital and Carlyle for up to USD 2.1 billion.
McDonald’s, which currently has 5,500 stores in China, has been increasing the market share in its fastest-growing region by banking on promotions to drive demand higher in a weak consumer spending environment.
“Having a stronger investment position should give them (MCD) a better voice in making sure that the growth that they expect out of that marketplace occurs,” said Northcoast Research analyst Jim Sanderson.
Reuters reported in August that Trustar Capital, formerly known as CITIC Capital, was also planning to raise a continuation fund that would allow the Chinese private equity firm to sell down its stake in McDonald’s China.
Carlyle shares were up about 1 per cent in early trading.