food giant McDonald's is selling a controlling stake in its China business to a group of investors led by state-owned Chinese conglomerate Citic in a deal worth up to $2.1 billion, the companies said Monday.
Citic Ltd. and its investment management unit Citic Capital will acquire 52 percent of the business while another partner, Washington-based private equity firm The Carlyle Group, will own 28 percent, the companies said in a statement.
McDonald's will keep the remaining 20 percent of the business, comprised of more than 2,400 restaurants in mainland China and 240 outlets in Hong Kong. The China operations, which employ more than 120,000 people, is valued at up to $2.1 billion, it said.
McDonald's will get cash and new shares under the terms of the agreement, which is for 20 years.
The deal, which still needs approval from regulators, is expected to be completed by mid-2017.
Oak Brook, Illinois-based McDonald's and its partners plan to add 1,500 restaurants in China and Hong Kong over the next five years to capitalize on booming demand from the country's growing middle class who have money to spend on eating out.
"As disposable incomes rise, people will continue to spend more on leisure and on dining out, and there is particularly great growth potential in tier three and four cities," the announcement said, referring to less-known provincial cities with large populations. "As such, the market for Western Quick Service Restaurants is expected to continue to grow rapidly."