Sources: Mc­Don­ald’s gets fi­nal bids for Chi­nese main­land, Hong Kong out­lets

China Daily (USA) - - FRONT PAGE -

Fast-food gi­ant Mc­Don­ald’s Corp has re­ceived fi­nal bids from at least three groups for its Chi­nese main­land and Hong Kong out­lets, with global pri­vate-eq­uity firms Car­lyle Group and TPG Cap­i­tal sep­a­rately team­ing up with Chi­nese part­ners for the busi­ness worth up to $3 bil­lion, sources told Reuters.

Car­lyle has joined with Chi­nese state con­glom­er­ate CITIC Group, while TPG has teamed up with mini-mar­ket op­er­a­tor Wu­mart Stores on their sep­a­rate bids for the 20-year fran­chise, said the sources, who de­clined to be named.

Real es­tate firm San­power Group, which owns Bri­tish de­part­ment store House of Fraser, also made an offer for the as­sets, one of the sources said. The com­pany has pre­vi­ously said it was team­ing up with Beijing Tourism Group.

TPG and Car­lyle de­clined to com­ment on their fi­nal bids. CITIC, Wu­mart and San­power didn’t re­turn re­quests for com­ment dur­ing the Mid-Au­tumn Fes­ti­val hol­i­day in China.

Based on the fi­nal bids, Mc­Don­ald’s may end up work­ing with the un­like­li­est of fran­chise part­ners. Both CITIC and San­power have lit­tle ex­pe­ri­ence in the restau­rant busi­ness.

Illi­nois-based Mc­Don­ald’s an­nounced in March it was re­or­ga­niz­ing its Asian op­er­a­tions, bring­ing in part­ners as it switches to a less cap­i­tal-in­ten­sive fran­chise model.

The CITIC-Car­lyle team is seen as the front runner to win the auc­tion, one of the sources said.

Car­lyle and TPG have taken on only mi­nor­ity stakes in the bid­ding ve­hi­cles as Mc­Don­ald’s has said it prefers long-term part­ners, whereas buy­out firms typ­i­cally cash out af­ter a few years.

Beijing Cap­i­tal Agribusi­ness Group, which is Mc­Don­ald’s cur­rent China part­ner, and China Cinda As­set Man­age­ment Co Ltd were pre­vi­ously in the run­ning, though it was not clear if they had made fi­nal of­fers by the close of bid­ding on Wed­nes­day.

The planned deal comes at a time when fast food op­er­a­tors in­clud­ing Mc­Don­ald’s and archri­val Yum Brands are re­cov­er­ing from a se­ries of food-sup­ply scan­dals in China that have un­der­mined their per­for­mance.

Some an­a­lysts have said team­ing up with lo­cal part­ners will help for­eign fast food op­er­a­tors to nav­i­gate sup­ply is­sues.

Ear­lier this month, Yum, best known for KFC, Pizza Hut and Taco Bell brands, agreed to sell a $460-mil­lion stake in its China unit to in­vest­ment firm Pri­mav­era Cap­i­tal and an af­fil­i­ate of Alibaba Group Hold­ing Ltd.

PHOTO / CFP

A pedes­trian walk­ing past a Mc­Don­ald’s in Yichang, Hubei prov­ince last month.

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