Carlyle Consortium Nears Deal to Buy McDonald's China Franchise

A consortium including private-equity giant Carlyle Group LP is close to a deal valued at as much as $2 billion to buy McDonald's Corp.'s China franchise, giving the U.S. fast-food chain operator cash and local help cracking the China market.

McDonald's is selling a roughly 80% stake in its China franchise to the Carlyle consortium, which also includes Chinese state-owned conglomerate Citic Ltd., the people said. The deal, which still needs a final sign off from the McDonald's board could fetch the fast-food operator an upfront payment of between $1.5 billion and $2 billion, according to people familiar with the situation.

An announcement could be made as early as next week, the people said.

A McDonald's spokesperson in China declined to comment.

The Oak Brook, Ill., chain will keep around a 20% stake in its 2,220-store empire in mainland China and Hong Kong, 65% of which it owns and operates. The move would help McDonald's trim its overall operational costs and preserve capital.

McDonald's would also rake in an estimated 5% to 7% of the China franchise sales for 20 years.

McDonald's monthslong auction of its China franchise attracted interest from private-equity firms TPG and Bain Capital LLC, teaming up with local partners, and a handful of local players bidding on their own.

Wayne Ma contributed to this article.

(END) Dow Jones Newswires

December 06, 2016 07:05 ET (12:05 GMT)

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