McDonald’s to Raise Stake in China Business to 48% by Buying Carlyle’s Minority Holding

This is an English adaptation of a FoodBud historical article originally published on November 20, 2023.

Securities Times reported that on November 20, 2023, McDonald’s Corporation and The Carlyle Group announced an agreement under which McDonald’s would acquire Carlyle’s minority stake in the strategic partnership company operating McDonald’s in mainland China, Hong Kong, and Macau.

After completion, the CITIC consortium would continue to hold 52% of the business, while McDonald’s would remain a minority shareholder but increase its stake from 20% to 48%.

Carlyle exits after six years

Carlyle’s sale comes six years after it invested in McDonald’s China.

In 2017, McDonald’s Corporation sold 80% of McDonald’s China for about USD 1.7 billion. Based on information at the time, the CITIC consortium took a 52% stake and Carlyle took 28%.

In July 2023, there had been reports that Carlyle was considering selling its stake in McDonald’s China. McDonald’s China responded then that the ownership structure remained unchanged. Four months later, the transaction materialized, with McDonald’s Corporation becoming the buyer.

China remains a major growth market

Chris Kempczinski, president and CEO of McDonald’s Corporation, said China had become McDonald’s second-largest market globally, with more than 5,500 restaurants, double the 2017 count. He said the company believed it was the right time to simplify the ownership structure, citing rising consumer demand and China’s position as McDonald’s fastest-growing market.

Since September 2019, McDonald’s China had achieved more than 30% systemwide sales growth. Looking ahead, the shareholders said they would continue working together to advance the company’s “Accelerating the Arches” growth plan in China and further expand the restaurant network.

Yichen Zhang, chairman and CEO of CITIC Capital and chairman of McDonald’s China, said that as controlling shareholder, CITIC was pleased to see McDonald’s headquarters recognize the long-term partnership and further invest in the China market. He said McDonald’s China was moving toward its target of exceeding 10,000 restaurants by 2028.

The transaction was subject to regulatory approval and was expected to close in the first quarter of 2024.

Note: transaction timing, ownership percentages, sales growth, restaurant-count targets, and other forward-looking figures are historical as of the November 20, 2023 source article.