McDonald’s is set to acquire Carlyle’s stake in its China operations, boosting its minority ownership from 20% to 48%.
In 2017, McDonald’s sold its majority control of restaurants in mainland China, Hong Kong, and Macao for $2.1 billion as part of a broader strategy to reduce its direct ownership and entrust franchisees with local market expertise.
At that time, Citic, a state-owned investment firm, took the majority stake, while Carlyle, a private equity firm, acquired a 28% stake. McDonald’s retained a 20% share in the business.
The financial details of the transaction announced on Monday were not disclosed. The deal is anticipated to be finalized in the first quarter of 2024, pending regulatory approval. Citic will continue to hold its 52% stake in the business.
McDonald’s CEO Chris Kempczinski commented, “We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential.”
Since the 2017 sale, McDonald’s has expanded its presence in China, growing its footprint to over 5,500 locations, making it the chain’s second-largest market by number of restaurants. The company aims to increase this number to 10,000 by 2028.
However, McDonald’s sales in China have faced challenges since the onset of the Covid pandemic. The country now accounts for about 4% of the chain’s total revenue, reflecting a 3.8% decline from the previous year, according to Factset estimates.
During McDonald’s most recent earnings call, Kempczinski noted that China is experiencing “slowing macroeconomic conditions and historically low consumer sentiment,” though the chain is attracting customers through promotional efforts for its burgers.
