McDonald’s Acquires Carlyle’s Stake in China Unit, Increases Chinese Business Ownership to 48%

McDonald’s is buying the minority stake held by Carlyle Group Inc. in its China-based unit. With the acquisition, the Chicago, Illinois-headquartered fast-food chain will increase its share and ownership of the Chinese business from 20% to 48%.

As per CNBC, the deal is part of McDonald’s broader strategy to own a smaller number of restaurants and hand them to franchisees who are well-versed or know the local markets. In this way, they can operate their own branches better.

Details of the Acquisition Deal

McDonald’s sold control of its fast-food locations in mainland China, Macau, and Hong Kong in 2017. The deal was worth $2.1 billion at that time and Carlyle bought a 28% stake while the McDonald’s HQ retained a 20% share of the business.

Now McDonald’s is buying back all the shares it sold to Carlyle six years ago. Regarding the price, the companies did not disclose the financial aspect of the deal but it was reported that it is expected to close within the first quarter of 2024.

Then again, it should be noted that it is still subject to regulators' approval. McDonald’s will own 48% of the brand’s Chinese operations and Citic Consortium will retain the 52% stake it is holding.

McDonald’s Growing Market in China

Bloomberg reported that China has become the chain’s second-largest market as the operations in the region continue to grow. Since 2017, McDonald’s has doubled the number of its restaurants and now boasts more than 5,500 locations. The new goal is to surpass the 10,000 mark by 2028.

"Our strategic partnership with CITIC and Carlyle has been extremely successful in growing McDonald's presence in the region since it began. China is now our second largest market; we've doubled our restaurants to more than 5,500 since 2017," McDonald’s president and CEO, Chris Kempczinski, said in a press release. "We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market's long-term potential."

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