Daily Management Review

$400 Million hoped to be Raised by McDonald’s by Selling Malaysia, Singapore Business


07/26/2016




$400 Million hoped to be Raised by McDonald’s by Selling Malaysia, Singapore Business
With a sale that could potentially fetch at least $400 million, McDonald’s Corp. is planning a sale of 20-year franchise rights in Malaysia and Singapore if reports and sources with knowledge of the matter are to be believed.
 
Sources who did to want to be identified because the information is private were cited in several reports that banks are being approached for funding by suitors for the fast-food operations in the two Southeast Asian markets. The sources said that amounts as much as $300 million in funding is being sought by a potential bidder who is in talks with lenders.
 
As McDonald’s pursues an international turnaround plan put in place after Chief Executive Officer Steve Easterbrook took over last year, it is seeking local franchise partners to run its restaurants in Malaysia and Singapore. The US fast food giant has made plans to sell out its operations in China, Hong Kong and South Korea as a part of a strategy to revamp the Big Mac maker’s ownership models throughout Asia. McDonald’s has a total market value of $112 billion.
 
A Singapore-based spokeswoman for the company said in an e-mailed response to media queries that McDonald’s has adopted a “development licensee model” for the two markets being talked about. Candidates “who are committed to helping accelerate growth and innovation in Malaysia and Singapore” have been identified and the company is in negotiations with them, she said.
 
"McDonald's has taken the decision to adopt a development licensee model for the Malaysia and Singapore markets in order to enable focused investment in the brand and speed up growth in these key Asian markets," she added.
 
Most of the McDonald’s outlets in Asia are company owned which is not the case for the company business strategy in its other major markets that include its home market of U.S. the company had said in March that ultimately having 95 percent of its restaurants in the region under local ownership was the goal for the sale efforts of the company.
 
According to the local website of McDonald’s, the company at present has around 9,000 employees employed in more than 120 restaurants in Singapore. The website also shows that more than 250 restaurants are operated by the global fast food chain in Malaysia.
 
By spinning off its China business ahead of a likely IPO next year, the competitor of McDonald’s, Yum Brands, is also restructuring its China business.
 
(Source:www.bloomberg.com & www.reuters.com) 






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