Local groups line up to bid for McDonald's China franchise

Updated: 2016-06-16 08:03

By Lyu Chang(China Daily USA)

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Two Chinese companies are considering making a joint bid with the US buyout firm KKR & Co LP for McDonald's Corp's franchise rights in China, in what would be a big bet on the future of the country's fast food sector.

China National Chemical Corp (ChemChina) and New Hope Group Co Ltd are among the potential suitors, and have asked to turn in their first-round offers by next week, people familiar with the matter said.

China Resources Enterprise Ltd and the investment firm Bain Capital LLC are also showing interest in bids which would total $2 billion, said the sources, who preferred to be anonymous.

ChemChina and New Hope did not answer emails and the US fast-food company also declined to comment, calling it a "speculation".

McDonald's is understood to have been looking since March for partners of its franchise rights to localize itself more in the Chinese mainland, Hong Kong and South Korea.

The globe's biggest hamburger chain is overhauling its shareholding structure in Asia to achieve an international turnaround plan rolled out last year. The company has targeted adding another 1,500 outlets in the three regions over the next five years.

Xiao Yujia, an expert on food and catering at China Investment Corp, said foreign fast-food chain operators are being forced to invite more investment in the world's most populous country due to fierce competition.

"The rise of Chinese chain restaurants is why McDonald's wants participation of strategic investors to adapt to changes in the local market," he said, predicting that more capital will flow into the rising food industry.

In 2015 total sales from Chinese food companies hit 3 trillion yuan ($456 billion), up 11.7 percent from a year earlier, and the figure is expected to expand to 5 trillion yuan by 2020 with a growth rate of 10 percent each year.

ChemChina - a chemical giant which focuses on six major sectors such as chemical materials, crude oil processing, rubber products, agricultural and chemical equipment - is not a new comer to the food market.

The state-owned company created a fast-food chain, Malan Noodle, to solve the employment problem for the company's employee's families.

Ren Jianxin, chairman of the Beijing-based company, said the name Malan commemorated the untimely death of his mother, surnamed Ma.

ChemChina is deep in an overseas shopping frenzy, with several planned acquisitions in the current year.

It announced in February that it would to pay more than $43 billion to acquire Swiss agrochemical and seed producer Syngenta AG, the biggest ever deal made by a Chinese company.

Zhong Nan, Wang Zhuoqiong and Bloomberg contributed to this story


Local groups line up to bid for McDonald's China franchise

Children visit a McDonald's Corp toy display in Beijing. Jiang Dong/China Dailt

(China Daily USA 06/16/2016 page13)