McDonald's could sell China, Hong Kong stores for $4 billion : Sources

McDonald's could sell China, Hong Kong stores for $4 billion : Sources

McDonald's has received more than half a dozen bids for its planned sale of China and Hong Kong stores, including offers from Beijing Tourism Group, Sanpower and ChemChina in a deal worth about US$3 billion (S$4 billion), people familiar with the matter told Reuters.

McDonald's is offering a 20-year master franchise agreement to buyers as part of the deal, but has placed restrictions which has discouraged some private equity firms from participating in the process, the people added. Still, some global buyout firms including Bain Capital, TPG Capital and Carlyle Group have entered the auction with a view to team up with some of the Chinese strategic bidders, the people added.

Other bidders who were preparing to place first-round bids ahead of Monday's deadline include, Beijing Capital Agribusiness Group, McDonald's China partner, and GreenTree Hospitality, the people added. It was not immediately clear if the last two suitors proceeded with the bids.

Oak Brook, Illinois-based McDonald's has hired Morgan Stanley to run the sale of about 2,800 restaurants in China, Hong Kong and South Korea, Reuters previously reported. The sale of South Korea is being run separately and it was not known if the same parties have expressed interest in the South Korean sale, the people added.

The China and Hong Kong business had about $200 million in earnings before interest, depreciation and amortization, and could be sold for about 15-16 times its core earnings, taking the deal value to about $3 billion, one of the people said.

ChemChina and Sanpower officials were not available to comment immediately, while Beijing Tourism Group said it did not know about the matter. An official at Beijing Capital Agribusiness Group said the company did not participate in the bidding. A spokeswoman for GreenTree said the company was not bidding currently.

Bain, Carlyle and TPG declined to comment. Sources declined to be identified as the sale process is confidential.

"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," a company spokeswoman said.

"As no decisions have been made, it would be premature to speculate further," she told Reuters in an email.

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