People walk past a McDonald’s restaurant in Beijing yesterday. McDonald’s Corp has agreed to sell the bulk of its Chinese mainland and Hong Kong business to CITIC and Carlyle Group for up to US$2.08 billion, seeking to expand rapidly without using much of its own capital. — AFP

Mcdonald's Corp has agreed to sell the bulk of its Chinese mainland and Hong Kong business to conglomerate CITIC and US private equity firm Carlyle Group for up to US$2.08 billion, seeking to expand rapidly without using much of its own capital.

CITIC, Carlyle and McDonald’s will form a new company that will act as a master franchisee of the chain’s 1,750 restaurants in the mainland and Hong Kong for 20 years, the companies said in a joint statement.

Under the deal, Hong Kong-listed CITIC Ltd will own about 32 percent of the business, with CITIC Capital, an affiliate firm that manages private equity funds and other alternative assets, holding 20 percent.

Carlyle will take 28 percent while McDonald’s will have the remaining 20 percent.

The deal is subject to regulatory approvals and set to close in mid-2017.

“McDonald’s globally overall is struggling and didn’t have the money or intellectual resources to focus on China,” said Shaun Rein, managing director at China Market Research Group.

The US fast food chain said local partners will help speed up growth in the world’s No. 2 economy through new restaurant openings, particularly in smaller cities that are expected to benefit from increased urbanization and income growth.

McDonald’s CEO Steve Easterbrook said in the statement that the fast food chain aims to be the “leading quick service restaurant across the Chinese mainland and Hong Kong” because by working together “we will unlock even faster growth and be closer to the customers and communities we serve.”

McDonald’s intends to add at least 1,500 restaurants in China over the next five years, with most located in lower-tier cities and focusing on key areas such as menu innovation, enhanced restaurant convenience, retail digital leadership and delivery.

“McDonald’s could better revive its performance in China by introducing local partners, and fast food in China is generally positive,” said food service analyst Summer Chen at market research firm Mintel.

Zhang Yichen, chairman and CEO of CITIC Capital, will serve as chairman of the board of the new company.