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11/04/2024 10:33:19 pm

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McDonald’s to Keep 25% Stake Intact in China, Hong Kong Business: Report

McDonald Plans to Keep 25 Percent Stake intact in China Business.

(Photo : Getty Images) According to a close source, McDonald's is reportedly planning to keep its 25 percent stake intact in its China and Hong Kong after selling the remaining stake to the consortium.

McDonald's plans to keep 25 percent stake intact in its China and Hong Kong business as it prepares to sell the remaining stake to a consortium led by private-equity firm Carlyle Group LP and Chinese conglomerate CITIC Group Corp, a person familiar with the matter said.

McDonald's want to exploit the future growth in the world's largest food market and hence wants to keep substantial stake intact, the source said, while adding that company wants to hold back the sale of its stores in South Korea.

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The American fast food giant initially had put the price tag of $3 billion for its stake but is now likely to fetch only between $1 billion and $2 billion from the sale out. A McDonald's spokeswoman in Shanghai refused to tender any response on the report. There has not been any response from either Carlyle Group or CITIC Group.        

McDonald's store sale attracted bids from several well-known companies including TPG Capital Management LP, Wumart Stores Inc., and Bain Capital. It must be noted that Bain Capital was actually part of the Carlyle and CITIC consortium, before it pulled out of the bidding race in October.       

The fast food giant's decision to go for an overhaul in its China business comes at a time when the entire fast food industry has been very badly hit by a series of food scandal. Yum Brands, which owns popular fast food chains such as Pizza Hut and KFC, was the most severely affected by the food scandal. The company had to eventually spin off its China business in October to recover from recurring losses.

The rapid changes in eating habits of Chinese consumers are also posing a major challenge for big foreign players like Yum and Mc Donald's. However, both foreign and local players are willing to soak up the pressure in a bid to squeeze up the bigger pie in the lucrative Chinese market.   

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