McDonald's buys back large stake in Chinese operations

(Sharecast News) - McDonald's is buying back a large stake in its Chinese operations as it looks to simplify its corporate structure and take advantage of future growth potential, just six years after selling off a majority holding.

Back in 2017, a consortium led by state-backed CITIC Group and US private equity firm Carlyle purchased an 80% stake in McDonald's China for a reported $2.1bn.

McDonald's is now buying back Carlyle's 28% stake in the unit - which manages its operations in mainland China, Hong Kong and Macau - for an undisclosed sum, taking its interest from 20% to 48%.

Though no financial information was given in the announcement, Bloomberg reported back in April that Carlyle was looking for buyers for its minority stake, seeking a valuation of between $8bn and $10bn.

China is now McDonald's second-largest market, having doubled in size to more than 5,500 restaurants since 2017. Meanwhile, the region has generated Systemwide sales growth of more than 30% in the market year-to-date since September 2019, the company said.

McDonald's said the increased holding will help it to accelerate growth as it works towards opening more than 10,000 restaurants in the region by 2028.

"Our strategic partnership with CITIC and Carlyle has been extremely successful in growing McDonald's presence in the region since it began," said McDonald's chief executive and president Chris Kempczinski.

"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."