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Tag: Citic Group

  • Changed deal as McDonald’s Corp sells

    Changed deal as McDonald’s Corp sells

    While finalising a buyer for its China and Hong Kong stores, McDonald’s Corp has decided to keep a “significant” minority stake.

    The US fast-food chain has picked a consortium led by private-equity firm Carlyle Group and Chinese conglomerate Citic Group to buy the stores.

    Its decision to retain the minority stake lowered the price tag from the $3 billion reportedly sought. An insider says McDonald’s decided to keep a slice of the business as it wants exposure to future growth in the world’s second-largest economy.

    Meantime, the company will also keep its stores in South Korea, which it previously also wanted to sell, Reuters reports.

    Early this year McDonald’s said it was reorganising its business in the region, seeking strategic partners in China, Hong Kong and South Korea as it switches to a less capital-intensive franchise model.

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  • McDonald’s China deal done

    McDonald’s China deal done

    A private-equity led consortium has been chosen to buy 20-year franchise rights for McDonald’s China and Hong Kong, Reuters is reporting.

    The successful bidder is a consortium led by private-equity firm Carlyle Group and Chinese conglomerate Citic Group, who will pay up to US$3 billion, according to an unidentified source who spoke with Reuters.

    A contract will likely be signed before Christmas.

    As reported in September, consortiums led by private equity firms Carlyle Group and TPG Capital were shortlisted as the bidding process narrowed the field. TPG had teamed with Beijing Capital Agribusiness Group, McDonald’s current China partner.

    Another private equity group, Bain Capital, had already dropped out.

    McDonald’s had previously said it was looking for long-term partners rather than private equity firms, which typically cash out after a few years.

    The deal covers some 2400 restaurants in China and Hong Kong. The 20 year franchise rights come with a 10-year renewal option.

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  • Lotte jumps into Shanghai retail

    Lotte jumps into Shanghai retail

    Lotte Department Store has signed on to a joint venture with Citic Group, a state-owned Chinese company, to operate a shopping mall in Shanghai and to build three more in the region between 2017 and 2019, the Korean company announced Monday.

    The joint venture will operate the already-existing Citic Square Mall in the bustling commercial district of Jing’an on West Nanjing Road. The mall is currently run by Citic Group, and Lotte’s participation in the joint venture with the Chinese company will allow the Korean retail giant to step foot into the Shanghai market without having to navigate through China’s byzantine business regulations.

    Lotte will hold approximately 49 percent of the joint venture’s shares and will focus on operations, while Citic Group will help with property development.

    The partnership was first offered by Citic Group, which makes 60 trillion won ($52.6 billion) in annual sales from financial services, energy and property development. “In China, companies in property development have started to launch businesses in retail because they already have the land to build new facilities,” a Lotte Department Store spokesman said.

    Although Citic Group is an influential company in China, it lacks expertise in retail, as it wasn’t the group’s main business in the past. Competition is also tough, as Shanghai is currently home to over 50 department stores and 80 shopping malls.

    Lotte Department Store, on the other hand, already has five branches across China and has experience with merchandising, store design and employee training in the country. Sales at Lotte’s five department stores rose 28 percent last year from the previous year.

    The Korean retail giant said it plans to use the partnership to create more opportunities for Korean brands to enter Shanghai. Consumers in the metropolis have shown particularly high interest in Korean popular culture, making it a good starting point for Korean fashion companies looking to set foot in China.

    “We believe the partnership with Citic Group will strengthen our stance in the Chinese market,” Lotte Department Store CEO Lee Won-jun said. “Our plan is to use this opportunity to help other domestic companies with potential to expand to China as well.”

     

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  • New contenders for McDonald’s China and Hong Kong

    New contenders for McDonald’s China and Hong Kong

    Private equity firms Carlyle Group and TPG Capital have teamed up with two different Chinese state companies to bid for the McDonald’s China and Hong Kong franchise licences.

    The deal is said to be worth between US$2 billion and US$3 billion, reports the Straits Times.
    McDonald’s has previously said it is looking for long-term partners rather than private equity firms, which typically cash out after a few years.

    Carlyle is working with Chinese state conglomerate Citic Group and TPG has joined with Beijing Capital Agribusiness Group to place binding bids ahead of this month’s deadline. Beijing Capital Agribusiness is McDonald’s current China partner.

    Reuters says the US fast-food giant, hit by food-supply scandals in China, has hired Morgan Stanley to run the sale of about 2800 restaurants in China, Hong Kong and South Korea.

    The two private equity-backed groups are bidding only for China and Hong Kong outlets, going up against Beijing Tourism Group, China Cinda Asset Management and private Chinese technology and real-estate firm Sanpower Group.

    China and Hong Kong account for more than 85 per cent of the 2800 outlets on the block.
    Meanwhile, South Korea’s Maeil Dairy Industry Co says it is considering bidding for McDonald’s Korean outlets, which are expected to fetch about $268 million. Interest has already been shown by CJ Corp and NHN Entertainment Corp.

    Changing to a less capital-intensive franchise model, McDonald’s is offering a 20-year franchise to buyers, with a 10-year extension option.

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