Services
Why McDonald's Wants to Sell a Big Stake in Its Japan Business
Published:
Last Updated:
Had it not been for a solid fourth quarter, the world’s largest fast-food company, McDonald’s Corp. (NYSE: MCD) would likely have shown no year-over-year profit growth. As it is analysts are expecting full-year revenues to drop more than 3% compared with 2015.
The Wall Street Journal reported Thursday that the company is currently seeking bids for a “significant stake” in McDonald’s Japan unit. The Tokyo-listed subsidiary has a reported market cap of around $3.5 billion, and McDonald’s owns just less than 50% of the shares. The U.S.-based company is shopping a 33% stake in the unit, meaning it would cut its own stake to less than 19%.
Earlier this week the company said it is selling an 80% stake in its China operations to a group that includes a number of Citic subsidiaries and the Carlyle Group L.P. (NASDAQ: CG). According to The Wall Street Journal, the sale would value McDonald’s Chinese business at $2.08 billion. The Citic companies would own a controlling 52% stake in the business and Carlyle, would own 28%. McDonald’s would retain the remaining 20%.
McDonald’s has been selling company-owned stores at a rapid clip over the past two years, with most of the buyers being franchise holders. Large sales like those of the China- and Japan-based variety are likelier to find buyers among private equity firms.
By 2018, according to the Wall Street Journal, McDonald’s expects to shed 4,000 company-owned stores to franchisees and wind up with corporate ownership of just 5% of the more than 36,000 global retail stores under the golden arches.
McDonald’s stock traded up about 0.3% in the noon-hour Thursday, at $121.19 in a 52-week range of $110.33 to $131.96. The consensus 12-month price target is $128.08.
ALERT: Take This Retirement Quiz Now (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
