The fast food giant has received more than half a dozen for the sale of its stores in Hong Kong and China..
McDonald’s Corporation has been planning to sell its Hong Kong and China stores and it has received several bids for the same. The bids have been offered by different enterprises including, but not limited to, ChemChina, Beijing Tourism Group, and Sanpower. Sources familiar to the matter has cited that the deal’s worth is as high as $3 billion. The sources have chosen not to be identified as the deal process is confidential.
The source added that the Golden Arches is offering a master franchise agreement covering a period of twenty years however, due to some barring in the agreement, several interested buyers have shown resistance. Nevertheless, several global buyout firms –such as Bain Capital, Carlyle Group, and TPG Capital have taken part in the auction in order to form alliance with several Chinese strategic bidders.
The first round bids are ought to be submitted ahead of Monday's deadline and apart from the interested bidders mentioned above, GreenTree Hospitality, and Beijing Capital Agribusiness Group, McDonald’s China partner, are also preparing to enter the first round. However, there hasn’t been any information regarding the formal entry of the last two suitors in the “bidding field.”
US most popular hamburgers chain has taken services of Morgan Stanley to manage the sale of its restaurants in China, South Korea, and Hong Kong which totaled to about 2,800, according to reports by Reuters. Additionally, the sale of South Korea based outlets is segregated from Hong Kong and China’s and it is still not clear whether the entities who have shown interest in the latter has same focus on South Korean sale or not, according to the sources privy to the matter.
One of the people –spoken on the basis of anonymity –told that Oak Brook, Illinois based organization’s business in Hong Kong and China had close to $200 million in earnings before interest, depreciation and amortization. The same has the potential of being sold at around fifteen to sixteen times its earnings –deducing from the $3 billion worth deal.
McDonald's stock closed at $122.63 at the market which closed on Tuesday.
No comments were received from ChemChina and Sanpower due to non-availability of their officials. GreenTree spokeswoman turned down the speculations of the bidding and expressed that the company has not been bidding lately. Beijing Tourism Group too said it was unaware of the matter. According to an official at Beijing Capital Agribusiness Group, the firm hasn’t participated in any rounds of bidding. Carlyle, TPG, and Bain too refused to comment.
Since the entry of CEO Steve Easterbrook in the company, the fast food giant has been able to perform significantly better. It has finally turnaround its business affair and for the last couple of quarters, it had been breaking analysts’ expectations. In the similar way, its affairs in China have been a lot better. Earlier, the company’s sales decline due to food scandals. The Chinese food preferences in relation to health are very strict and the company had had a major blow in the region. The company is back to the recovery track and its plan of forwarding franchise agreement reflects the same.
No official disclosures have been given relating to the bidding round. A company’s spokeswoman has told Reuters via email, "We are making progress as we look for long-term strategic partners with local relevance who have complementary skills and expertise coupled with a strong understanding of McDonald's Brand and who share our values and vision with a dedicated focus on accelerating growth initiatives." She didn’t give in much as the deal is still in its infancy and according to her, any speculations at this stage would be premature.
McDonald’s Corporation has been planning to sell its Hong Kong and China stores and it has received several bids for the same. The bids have been offered by different enterprises including, but not limited to, ChemChina, Beijing Tourism Group, and Sanpower. Sources familiar to the matter has cited that the deal’s worth is as high as $3 billion. The sources have chosen not to be identified as the deal process is confidential.
The source added that the Golden Arches is offering a master franchise agreement covering a period of twenty years however, due to some barring in the agreement, several interested buyers have shown resistance. Nevertheless, several global buyout firms –such as Bain Capital, Carlyle Group, and TPG Capital have taken part in the auction in order to form alliance with several Chinese strategic bidders.
The first round bids are ought to be submitted ahead of Monday's deadline and apart from the interested bidders mentioned above, GreenTree Hospitality, and Beijing Capital Agribusiness Group, McDonald’s China partner, are also preparing to enter the first round. However, there hasn’t been any information regarding the formal entry of the last two suitors in the “bidding field.”
US most popular hamburgers chain has taken services of Morgan Stanley to manage the sale of its restaurants in China, South Korea, and Hong Kong which totaled to about 2,800, according to reports by Reuters. Additionally, the sale of South Korea based outlets is segregated from Hong Kong and China’s and it is still not clear whether the entities who have shown interest in the latter has same focus on South Korean sale or not, according to the sources privy to the matter.
One of the people –spoken on the basis of anonymity –told that Oak Brook, Illinois based organization’s business in Hong Kong and China had close to $200 million in earnings before interest, depreciation and amortization. The same has the potential of being sold at around fifteen to sixteen times its earnings –deducing from the $3 billion worth deal.
McDonald's stock closed at $122.63 at the market which closed on Tuesday.
No comments were received from ChemChina and Sanpower due to non-availability of their officials. GreenTree spokeswoman turned down the speculations of the bidding and expressed that the company has not been bidding lately. Beijing Tourism Group too said it was unaware of the matter. According to an official at Beijing Capital Agribusiness Group, the firm hasn’t participated in any rounds of bidding. Carlyle, TPG, and Bain too refused to comment.
Since the entry of CEO Steve Easterbrook in the company, the fast food giant has been able to perform significantly better. It has finally turnaround its business affair and for the last couple of quarters, it had been breaking analysts’ expectations. In the similar way, its affairs in China have been a lot better. Earlier, the company’s sales decline due to food scandals. The Chinese food preferences in relation to health are very strict and the company had had a major blow in the region. The company is back to the recovery track and its plan of forwarding franchise agreement reflects the same.
No official disclosures have been given relating to the bidding round. A company’s spokeswoman has told Reuters via email, "We are making progress as we look for long-term strategic partners with local relevance who have complementary skills and expertise coupled with a strong understanding of McDonald's Brand and who share our values and vision with a dedicated focus on accelerating growth initiatives." She didn’t give in much as the deal is still in its infancy and according to her, any speculations at this stage would be premature.