New contenders for McDonald’s China and Hong Kong

Private equity firms Carlyle Group and TPG Capital have teamed up with two different Chinese state companies to bid for the McDonald’s China and Hong Kong franchise licences.

The deal is said to be worth between US$2 billion and US$3 billion, reports the Straits Times.
McDonald’s has previously said it is looking for long-term partners rather than private equity firms, which typically cash out after a few years.

Carlyle is working with Chinese state conglomerate Citic Group and TPG has joined with Beijing Capital Agribusiness Group to place binding bids ahead of this month’s deadline. Beijing Capital Agribusiness is McDonald’s current China partner.

Reuters says the US fast-food giant, hit by food-supply scandals in China, has hired Morgan Stanley to run the sale of about 2800 restaurants in China, Hong Kong and South Korea.

The two private equity-backed groups are bidding only for China and Hong Kong outlets, going up against Beijing Tourism Group, China Cinda Asset Management and private Chinese technology and real-estate firm Sanpower Group.

China and Hong Kong account for more than 85 per cent of the 2800 outlets on the block.
Meanwhile, South Korea’s Maeil Dairy Industry Co says it is considering bidding for McDonald’s Korean outlets, which are expected to fetch about $268 million. Interest has already been shown by CJ Corp and NHN Entertainment Corp.

Changing to a less capital-intensive franchise model, McDonald’s is offering a 20-year franchise to buyers, with a 10-year extension option.

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