McDonald’s to acquire Carlyle’s stake in China unit

(Reuters) -McDonald’s said on Monday it will buy investment firm Carlyle’s minority stake in the partnership that manages the burger chain’s business in mainland China, Hong Kong and Macau as it looks to simplify its structure in the region.

McDonald’s said a consortium led by CITIC will maintain its controlling ownership and continue to own 52% of the business. McDonald’s will remain a minority partner, increasing its stake from 20% to 48%.

The burger chain in 2017 had agreed to sell 80% of its China and Hong Kong businesses to state-backed conglomerate CITIC Ltd, its investment arm CITIC Capital and Carlyle for up to $2.1 billion.

Reuters reported in April that Carlyle was discussing various options with financial advisers for its stake in McDonald’s China, including setting up a continuation fund for the asset. Carlyle owned a 28% stake, according to McDonald’s China.

McDonald’s CEO Chris Kempczinski said on Monday there was “no better time to simplify our structure” given the benefits of China’s long-term potential.

McDonald’s currently has 5,500 stores in China and is its fastest-growing market.

The company has been increasing its market share in China by banking on promotions to drive demand higher in a weak consumer spending environment.

Reuters reported in August that Trustar Capital, formerly known as CITIC Capital, was also planning to raise a continuation fund that would allow the Chinese private equity firm to sell down its stake in McDonald’s China.

(Reporting by Granth Vanaik in Bengaluru; Additional reporting by Deborah Sophia; Editing by Anil D’Silva and Shounak Dasgupta)