McDonald’s Corporation (NYSE:MCD) is planning to sell the majority of its stake in its China business.
McDonald’s Corporation will be selling the majority of its stake in China to Citic, a financial firm in China. The Carlyle Group LP (NASDAQ:CG) will also be buying into the deal with a 28% stake. This will leave MCD with a 20% stake in the China business and will earn in about $2.1 billion.
McDonald’s Corporation’s new partners in China will also likely help bring in the new menu changes that it has been planning for the country. Also, there are plans to open 1,500 new restaurants in China and Hong Kong over the next fives years. MCD wants to bring its business to more small towns in the country.
Steve Easterbrook, the CEO of McDonald’s Corporation, says in the deal will allow it to better understand business in China. The company will also use the move to reduce the number of stores it owns by 1,750 as it shifts toward having more franchisees take over, reports CNNMoney.
“At the end of the day they can make more money,” Ben Cavender, a senior market analyst at China Market Research, told The New York Times about McDonald’s Corporation’s franchise plans in China. “They can be more profitable if they are asset light and make money off franchise fees and leave the heavy lifting to somebody else.”
MCD stock was largely unmoved by the news and CG stock was up 1% as of Noon Monday.