(Bloomberg) -- McDonald’s Corp. agreed to buy Carlyle Group Inc.’s minority stake in the partnership that runs the restaurant chain’s business in China, Hong Kong and Macau for an undisclosed price.
The Chicago-based company will increase its stake in the partnership to 48% from 20% as part of the deal, according to a statement Monday. The Citic Consortium, a Chinese conglomerate, will continue to hold 52% of the business.
China has grown to be McDonald’s second-largest market, with the chain doubling its locations there to more than 5,500 since 2017, according to the statement. The goal is for more than 10,000 restaurants by 2028.
“We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand,” McDonald’s Chief Executive Officer Chris Kempczinski said in the statement.
Carlyle was originally planning to sell its 28% stake in the business along with Citic’s private equity arm Trustar Capital in a $4 billion deal that involved setting up a new vehicle while attracting fresh capital, people with knowledge of the talks have said. McDonald’s offer for Carlyle’s stake trumped that plan, the people said.
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The Carlyle exit in China comes as US and European investors are holding off investing in the country amid rising geopolitical tensions and a sluggish economy. A measure of foreign direct investment this month turned negative for the first time in 25 years, while a recent survey by the American Chamber of Commerce in Shanghai shows respondents are the gloomiest they’ve been on the business outlook for decades.
The deal is subject to regulatory approvals and is expected to close in the first quarter of 2024.
(Updates with details on Carlyle’s plans from fifth paragraph)
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