McDonald’s is investing more in China to tap ‘opportunity’
Spread the love

McDonald’s is investing more in China to tap ‘opportunity’ McDonald’s has struck a deal to ramp up its stake in its China business to just under 50% and expressed confidence in its growth prospects in the world’s second-largest economy.

This contrasts sharply with the current trend of multinational corporations reducing investments in China or leaving the market all together due to geopolitical and economic constraints.

McDonald’s stake will increase to 48% with the acquisition of investment firm Carlyle’s 28% stake in the burger chain’s China business, which also includes Hong Kong and Macau. Five-two percent of the company is owned by a consortium led by China’s state-backed conglomerate CITIC.

In a statement, McDonald’s CEO Chris Kempczinski said that the time is right to simplify McDonald’s structure in order to capture increased demand and benefit from our fastest-growing market’s long-term potential.

A person with knowledge of the deal said the China unit was valued at around $6 billion. Financial terms were not disclosed.

It is much more than the $2.1 billion it was valued at when McDonald’s sold 80% of the business to CITIC, CITIC Capital – now known as Trustar Capital – and Carlyle in 2017. This US firm wanted to expand rapidly without relying heavily on its own capital at the time.

Different sources have previously stated that Carlyle and Trustar had at one point sought a valuation of up to $10 billion.

McDonald’s stores have doubled to 5,500 in China since 2017, becoming the company’s second-largest market. By 2028, the company expects to have more than 10,000 stores in China.

In a statement, the company said its Chinese business has experienced sales growth of more than 30% since September 2019.