McDonald's works to cut costs by selling a majority stake in its China and Hong Kong businesses

Courtney Goldsmith
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A Chinese McDonald's worker serves customers
McDonald's will retain 20 per cent ownership to benefit from further growth in the area (Source: Getty)

McDonald's is set to sell 80 per cent of its China and Hong Kong businesses for up to $2.1bn (£1.7bn) in an effort to franchise more of its global restaurants.

The deal with Chinese conglomerate Citic and US asset manager Carlyle will help McDonald's cut operating costs in its Asian businesses.

Originally, the fast-food giant planned to raise up to $3bn from the sale, but Reuters reported it decided to keep a minority stake to benefit from future growth in China.

Read more: McDonald's gets final bids for super-size sell-off in China and Hong Kong

Hong Kong-listed Citic and its affiliate company Citic Capital will hold a stake of 52 per cent, while US private equity firm Carlyle will hold 28 per cent. McDonald's will hold on to 20 per cent.

The US-based chain operates and owns most of its 2,400 restaurants in mainland China and more than 240 in Hong Kong. It plans to add a further 1,500 in the area over the next five years.

McDonald's announced in May of last year it would commit to refranchising 4,000 restaurants by the end of 2018 with the long-term goal of becoming 95 per cent franchised.

Read more: McDonald's to create 5,000 new UK jobs by the end of 2017

In March, the restaurant operator said it planned to reorganise operations in the region and was on the lookout for strategic partners in China, Hong Kong and South Korea.

McDonald's chief executive Steve Easterbrook said the region presents a huge opportunity for growth.

This new partnership will combine one of the world's most powerful brands and our unparalleled quality standards with partners who have an unmatched understanding of the local markets and bring enhanced capabilities and new partnerships, all with a proven record of success.

The 20-year master franchise deal has been in negotiations for months. McDonald's received final offers in September, which included one from TPG Capital and local firm Wemart Stores and from House of Fraser owner Sanpower Group.

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