McDonald’s Corp. selected bidders including China Cinda Asset Management Co., the nation’s second-biggest bad-loan manager, and dairy producer Beijing Sanyuan Foods Co. to make binding offers for its operations in China and Hong Kong, people with knowledge of the matter said.
Sanpower Group Co., the Chinese owner of U.K. department store House of Fraser, and GreenTree Hospitality were also invited to submit second-round bids in September, according to the people. McDonald’s is selling 20-year mass franchise rights in China and Hong Kong, which could fetch about $2 billion, the people said, asking not to be identified as the information is private.
McDonald’s is revamping its ownership structure in Asia as it pursues an international turnaround plan put in place after Chief Executive Officer Steve Easterbrook took the reins last year. The fast-food chain said in March it is seeking franchise partners in mainland China, Hong Kong and South Korea to invest fresh capital and facilitate local decision-making.
Unlike in its other major markets — including the U.S.– most McDonald’s outlets in north Asia are company-owned. The fast-food chain aims to eventually have 95 percent of its restaurants in the region under local ownership, it said in March.
“Refranchising has been a big trend in the last two years, and it just kind of continues that trend,” said Jennifer Bartashus, a Bloomberg Intelligence analyst. “You shift a lot of the operational risk onto the franchisee.”
‘Ideal Time’
With the financial health of Chinese consumers uncertain as the nation’s economic growth slows, “it’s kind of an ideal time to go into this transition,” she said.
Shares of McDonald’s rose 0.1 percent to $120.76 at 12:02 p.m. in New York. The stock gained 2.1 percent this year through Wednesday, lagging the benchmark Standard & Poor’s 500 Index’s 2.7 percent advance.
China National Chemical Corp., known as ChemChina, didn’t proceed to the second round, the people said. The state-owned enterprise, which agreed to buy Swiss pesticide maker Syngenta AG for about $43 billion in February, was among companies considering bids for the Chinese operations of McDonald’s, people with knowledge of the situation said last month.
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