McDonald’s Corp agreed to sell a controlling stake in its China and Hong Kong operations to a group of financial investors in the latest effort by the world’s largest fast-food chain to catch up with Western rivals by opening new stores in smaller Chinese cities.
A consortium including Citic Ltd (中信股份有限公司) and Carlyle Group LP will buy an 80 percent stake in a deal valuing the business at as much as US$2.08 billion, according to a group statement yesterday.
McDonald’s is to retain a one-fifth share in the business, with the partnership planning to add more than 1,500 restaurants over the next five years in China’s lower-tier cities.
Oak Brook, Illinois-based McDonald’s and rival Yum China Holdings Inc (百勝中國), which owns the KFC and Pizza Hut brands in the mainland, are combating rising domestic competition as they fight to retain middle-class Chinese consumers who increasingly demand high-quality and healthier dining options. The fast-food giant is also looking at further deals in markets such as South Korea, Japan and Southeast Asia as it streamlines its sprawling global operations.
“Citic and Carlyle’s resources will allow McDonald’s to expand rapidly and refurbish old restaurants, which is expensive to do,” said Ben Cavender, a Shanghai-based analyst at China Market Research Group. “Given that McDonald’s lags behind KFC in terms of store count in China, we can expect them to expand aggressively and invest heavily.”
Yum China Holdings and Starbucks Corp plan to add about double the number of stores — as many as 3,000 in China — over the same period.
Under the deal, Chinese state-backed conglomerate Citic and Citic Capital Partners will jointly take a 52 percent stake, while Carlyle will hold 28 percent.
While Citic and Carlyle are paying a “substantial price” for 20-year franchise rights, the food and beverage chains are “cash machines,” Cavender said.
In contrast, Yum China licensed the KFC and Pizza Hut brands from Yum Brands Inc for 50 years, with automatic renewals that could make it possibly indefinite.
The McDonald’s transaction is Carlyle’s second-biggest deal in China, trailing only its investments in China Pacific Insurance Group Co, according to a person with knowledge of the matter.
The US private equity firm invested a total of more than US$700 million in China Pacific Insurance in 2005 and 2007, the person said, asking not to be identified because the information is private.
A spokeswoman for Carlyle declined to comment.
The deal combines McDonald’s with partners “who have an unmatched understanding of the local markets and bring enhanced capabilities and new partnerships,” chief executive officer Steve Easterbrook said in the group statement.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”