Liu Minxia

    mllmx@msn.com

    MCDONALD’S Corp. said yesterday that it has reached a deal to sell a controlling stake in its Chinese mainland and Hong Kong operations to an investor group led by CITIC Ltd. and Carlyle Group, which will enable the U.S. fast food giant to add more than 1,500 restaurants in the Chinese market over the next five years.

    The deal, which includes 20-year mass franchise rights, will value the business at as much as US$2.08 billion. CITIC Ltd. and CITIC Capital Partners will jointly take a 52 percent stake, while Carlyle will hold 28 percent and McDonald’s will retain a 20 percent stake, according to a joint statement.

    The partnership will use its combined expertise and resources to accelerate growth in McDonald’s business through new restaurant openings, particularly in third-tier and fourth-tier cities, and to improve sales performance in existing restaurants, the U.S. firm said. The new company will be the largest McDonald’s franchisee outside the United States.

    McDonald’s has been revamping its ownership structure in global markets as the world’s biggest restaurant chain attempts to streamline its sprawling global operations. CEO Steve Easterbrook is pursuing a turnaround plan to revive the company as it faces the fourth straight year of traffic declines in the United States, its largest market.

    “The Chinese mainland and Hong Kong represent an enormous growth opportunity for McDonald’s,” said Easterbrook. “This new partnership will combine one of the world’s most powerful brands and our unparalleled quality standards with partners who have an unmatched understanding of the local markets and bring enhanced capabilities and new partnerships, all with a proven record of success.”

    McDonald’s said in March it was seeking strategic partners to help it expand. The months-long auction process drew interest from international private equity funds and local companies.

    It has more than 2,800 restaurants in those locations, the majority of which are company-owned. Its long-term target is to have 95 percent of its international outlets owned by franchises.

    McDonald’s main competitor in China, Yum! Brands, also had its Chinese KFC operator spun off from its U.S. parent Nov. 1, and has a carte blanche opportunity to pursue growth and add 600 restaurants a year in the country, CEO Micky Pant has said.