McDonald's China Franchise Deal Could Fetch Up To $2 Bln Up Front
Struggling fast food giant McDonald's is looking to cut a deal to turn its 2,200-store empire in China-65% of which it owns and operates-into a cash machine. The franchising of its China operations, for which a partner could be determined before the end of the year, is expected to fetch between $1.5 billion and $2 billion up front from investors, the Wall Street Journal reported citing people familiar with the matter.
McDonald's would also rake in an estimated 5% to 7% of sales for the 20-year life of the deal. It would keep a minority stake in these far-flung stores, while slashing its operational costs and preserving precious capital.
A clutch of at least six bidders has shown interest in McDonald's China franchise, including U.S. private-equity giants Carlyle Group LP, TPG and Bain Capital LLC, the report said.
The three private-equity firms have teamed up with local Chinese partners, such as Citic Ltd. and Wumart Stores Inc., who know local market conditions. McDonald's is also looking to cut a similar deal with outside investors for its South Korea stores. (dpa)
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