The acquisition of McDonald’s Corp’s business in China will be completed as soon as August, CITIC Group chairman Chang Zhenming has said, domestic news portal stcn.com reported on Wednesday [14 June 2017]. CITIC, CITIC Capital Holdings and U.S. private equity firm Carlyle Group LP reached a deal to buy an 80 percent stake in McDonald’s Corp for $2.08 billion, which covers the company’s business in the Chinese mainland and Hong Kong, CITIC announced earlier this year…Full Article: ECNS.cn June 2017

Key Point

  • The Chairman of CITIC Group stated that Dah Chong Hong Holdings, a subsidiary of CITIC Group, may become a supplier of McDonald’s in the future.

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  • In February 2017, Beijing-based Hejun Vanguard Group filed two complaints against McDonald’s China claiming that the  CITIC/Carlyle Group deal would negatively impact 120,000 Chinese employees of the fast-food giant, and that McDonald’s itself failed to properly register all of its restaurants in China.
  • In January 2017, McDonald’s announced it would sell 80% of Chinese operations (including Hong Kong). As a result of the US$2.08 billion deal, China’s CITIC will have a 52% stake while USA’s Carlyle Group will have a 28% stake. McDonald’s will retain a 20% stake.
  • In December 2016, McDonald’s selected USA’s Carlyle Group and its Chinese partner CITIC Group to purchase its franchises in mainland China and Hong Kong for approximately US$2 billion. The bidding prices for McDonald’s China fell roughly from US$3 Billion to US$2 Billion after McDonald’s decided to retain a 25% stake. McDonald’s also decided to not sell its South Korean fast food outlets. During the same month, McDonald’s announced plans to begin online-to-offline (O2O) strategy to allow customers to digitally order, pay, and customize their meal. The pilot phase of the O2O strategy will cover 1,000 restaurants (~40% of its restaurants) located across 13 Chinese cities.
  • In October 2016, Wumart’s bidding partner, the California-based private equity firm TPG Capital, exited the bidding process for McDonald’s China. The remaining bidders included Bain Capital and Green-Tree Hospitality (partners), Carlyle Group and CITIC Group Corp. (partners), Wumart Stores Inc. (former partner of TPG Capital), and Beijing Sanyuan Group (see  Beijing Capital Agribusiness Group).
  • In June 2016, McDonald’s Corporation was exploring selling its mainland Chinese and Hong Kong stores. Potential bidders include Bain Capital, TPG Capital, Carlyle Group, Beijing Capital Agribusiness Group, and GreenTree Hospitality.
  • In April 2015, McDonald’s announced it would close dozens of its restaurants in mainland China. As of mid-2015, McDonald’s China had more than 2,000 restaurants.
  • In November 2014, McDonald’s China’s supply chain came under increased scrutiny after the US Department of Agriculture approved a genetically modified (GM) potato developed by J.R. Simplot, a McDonald’s supplier.
  • In August 2014, McDonald’s in Hong Kong stopped selling fresh corn cups, green salad and fresh lemon tea as these items were primarily sourced from OSI processors in Hebei and Gaungzhou.
  • In July 2014, Shanghai Husi, a division of US-based OSI Group LLC, was found to have sold expired meat to McDonald’s, Pizza Hut, Papa John’s, Seven-Eleven and FamilyMart (Japan-based convenience store).
  • In October 2012, the Vice President of Brasil Foods announced that his company was partnering with CITIC’s Dah Chong Hong (DCH) to construct a pork and poultry processing in China in late 2013.
  • Founded in 2009 and headquartered in Beijing, Beijing Capital Agribusiness Group is a conglomeration of Beijing Sanyuan Group (Dairy), Beijing Huadu Group (Poultry), and Beijing Dafa Livestock. Beijing Sanyuan (SHA:600429) is its only publicly traded company in the group and was the only major dairy that was not implicated in the 2008 melamine scandal.
  • Founded in 1994 and headquartered in Beijing, Wumart is one of China’s leading retail chains. Their outlets are primarily located in the northern provinces of Beijing, Zhejiang, Tianjin and Hebei.
  • In October 1990, McDonald’s opened its first restaurant in mainland China (Shenzhen, Guangdong Province). In April 1992, McDonald’s opened its first restaurant in Beijing.
  • Founded in 1979 and headquartered Beijing, CITIC Group (formerly CITIC Pacific; HKG:0267) is a state-owned conglomerate. Dah Chong Hong Holdings (Hong Kong listed) and Citic Guoan Wine (Shanghai listed) are subsidiaries of CITIC.
  • In 1975, McDonald’s opened its first restaurant in Hong Kong.

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