Sep 16, 2016

    At least 3 bids for McDonald's China/HK outlets


    FAST-FOOD giant McDonald's has received final bids from at least three groups for its China and Hong Kong outlets.

    Global private equity firms Carlyle Group and TPG Capital separately have teamed up with Chinese partners for the business worth up to US$3 billion (S$4.1 billion), sources told Reuters.

    Carlyle has joined with Chinese state conglomerate Citic Group, and TPG with mini-market operator Wumart Stores, to bid for the 20-year franchise, added the sources.

    Real estate firm Sanpower Group, which owns British department store House Of Fraser, also made an offer, one of the sources said. The company has previously said it was teaming up with Beijing Tourism Group.

    Based on the final bids, McDonald's may end up working with the unlikeliest of franchise partners. Both iron-ore to financial conglomerate Citic and real estate to technology group Sanpower have little experience in the restaurant business.

    McDonald's said in March it was reorganising its Asian operations to switch to a less capital-intensive franchise model.

    Reuters had reported that it had hired Morgan Stanley to run the sale of about 2,400 outlets in China and Hong Kong.

    The Citic-Carlyle team is seen as the front runner to win the auction, a source said.

    Carlyle and TPG have taken on minority stakes in the bidding vehicles as McDonald's has said it prefers long-term partners. Buyout firms typically cash out after a few years.

    Beijing Capital Agribusiness Group, McDonald's current China partner, and China Cinda Asset Management were previously in the running, though it was not clear if they had made final offers by the close of bidding on Wednesday.