Citic plans to sell its minority stake in McDonald’s China business to one of its private equity arms as part of efforts to lower its debt as Beijing pushes for large, government-backed companies to deleverage, reported the Financial Times.
As part of any deal, Citic Capital, the private equity arm of the state-owned financial services group, would increase its stake in the US fast-food chain’s China operation from 20% to 42%, according to FT sources.
The transaction would give McDonald’s Chinese business an enterprise value of about $3 billion. It had an estimated enterprise value of about $2 billion three years ago when Citic and Carlyle, the private equity firm, jointly bought a controlling stake in the operations from McDonald’s US parent.
The Chinese government has in recent years prodded state-owned enterprises to reduce debt, a side-effect of a years-long investment splurge. The sale will simplify the management of McDonald’s China unit, while freeing up cash that will help Citic improve its debt position.