Chinese conglomerate CITIC Group completed the acquisition of a majority stake in U.S. fast food chain McDonald's Corp.'s stores in China, the company said Friday.
Following the July 31 completion of the deal, a new venture set up by CITIC Ltd., CITIC Capital, Carlyle Capital and McDonald's will become the U.S. restaurant company's main franchisee on the Chinese mainland and in Hong Kong for the next 20 years, according to a statement issued by Hong Kong-listed CITIC Ltd.
The new venture paid $2.08 billion for McDonald's China business under an agreement reached in January. CITIC Ltd. and CITIC Capital jointly hold 52% of the new company while Carlyle Capital owns 28% and McDonald's, 20%.
The new company will become McDonald's largest franchisee outside the U.S., CITIC Ltd. said.
The partners earlier agreed to switch McDonald's focus in the China market to smaller cities, planning to open more than 1,500 new restaurants on the mainland and in Hong Kong over the next five years.
Since McDonald's opened its first China outlet in Shenzhen in 1990, China has become the burger chain's third-largest market. In 2016, more than 1 billion diners visited McDonald's restaurants on the mainland.
But growth in China is losing momentum as more rivals joined the country's dining market. In March 2016, McDonald's announced the auction of 20-year franchise rights on the Chinese mainland, Hong Kong and South Korea. The action was part of a worldwide strategy to remake itself into an asset-light, franchise-focused model to revive growth following a continuous business decline since 2013.
The McDonald's franchise auction has lured a long list of potential bidders from China, including hotel chain operator GreenTree Inn, China National Chemical Corp., China Cinda Asset Management Corp. and Beijing Capital Tourism Co.
McDonald's last week reported more than $6 billion in global revenue for the second quarter, beating analysts' prediction of $5.9 billion.
Chinese conglomerate CITIC Group completed the acquisition of a majority stake in U.S. fast food chain McDonald's Corp.'s stores in China, the company said Friday.
