Lo­cal groups line up to bid forMcDon­ald’s China fran­chise

China Daily (Canada) - - LIFE - By LYUCHANG lvchang@chi­nadaily.com.cn

Two Chi­nese com­pa­nies are con­sid­er­ing mak­ing a joint bid with the US buy­out firm KKR & Co LP forMcDon­ald’s Corp’s fran­chise rights in China, in what would be a big bet on the fu­ture of the coun­try’s fast food sec­tor.

China Na­tional Chem­i­cal Corp (ChemChina) and New Hope Group Co Ltd are among the po­ten­tial suitors, and have asked to turn in their firstround of­fers by next week, peo­ple fa­mil­iar with the mat­ter said.

China Re­sources En­ter­prise Ltd and the in­vest­ment firm Bain Cap­i­tal LLC are also show­ing in­ter­est in bids which would to­tal $2 bil­lion, said the sources, who pre­ferred to be anony­mous.

ChemChina and New Hope did not an­swer emails and the US fast-food com­pany also de­clined to com­ment, call­ing it a “spec­u­la­tion”.

McDon­ald’s is un­der­stood to have been look­ing sinceMarch for part­ners of its fran­chise rights to lo­cal­ize it­self more in the Chi­nese main­land, Hong Kong and South Korea.

The globe’s big­gest ham­burger chain is over­haul­ing its share­hold­ing struc­ture in Asia to achieve an in­ter­na­tional turnaround plan rolled out last year. The com­pany has tar­geted adding an­other 1,500 out­lets in the three re­gions over the next five years.

Xiao Yu­jia, an ex­pert on food and ca­ter­ing at China In­vest­ment Corp, said for­eign fast-food chain op­er­a­tors are be­ing forced to in­vite more in­vest­ment in the world’s most pop­u­lous coun­try due to fierce com­pe­ti­tion.

“The rise of Chi­nese chain restau­rants is why McDon­ald’s wants par­tic­i­pa­tion of strate­gic in­vestors to adapt to changes in the lo­cal mar­ket,” he said, pre­dict­ing that more cap­i­tal will flow into the ris­ing food industry.

In 2015 to­tal sales from Chi­nese food com­pa­nies hit 3 tril­lion yuan ($456 bil­lion), up 11.7 per­cent from a year ear­lier, and the fig­ure is ex­pected to ex­pand to 5 tril­lion yuan by 2020 with a growth rate of 10 per­cent each year.

ChemChina — a chem­i­cal gi­ant which fo­cuses on six ma­jor sec­tors such as chem­i­cal ma­te­ri­als, crude oil pro­cess­ing, rub­ber prod­ucts, agri­cul­tural and chem­i­cal equip­ment — is not a new comer to the food mar­ket.

The state-owned com­pany cre­ated a fast-food chain, Malan Noo­dle, to solve the em­ploy­ment prob­lem for the com­pany’s em­ployee’s fam­i­lies.

Ren Jianxin, chairman of the Bei­jing-based com­pany, said the name Malan com­mem­o­rated the un­timely death of his mother, sur­named Ma.

ChemChina is deep in an over­seas shop­ping frenzy, with sev­eral planned ac­qui­si­tions in the cur­rent year.

It an­nounced in Fe­bru­ary that it would to pay more than $43 bil­lion to ac­quire Swiss agro­chem­i­cal and seed pro­ducer Syn­genta AG, the big­gest ever deal made by a Chi­nese com­pany.

Zhong Nan, Wang Zhuoqiong and Bloomberg con­trib­uted to this story

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