McDonald’s To Sell Its Stake In Korean Business Unit

McDonald's Korea, turnaround, Steve Easterbrook

The fast food giant decided to sell its Korean business share amidst the talk of global expansion

Since last year, McDonald’s Corporation has been working on revamping its operations for the sustainable growth of the company. In the light of such, the Golden Arches is trying to sell its Korean business setup, according to Korea Herald. According to the sources, the fast food giant has delegated the work to Morgan Stanley –an investment firm –to search for a suitable buyer. However, how much stake is the company willing to sell is still unknown.

It was only last month when the Oak Brooks, Illinois disclosed its expansion plan in the Asian region and was seeking for strategic partners in the region’s market including Korea as well. Therefore, it is highly likely that the company will only sell out a fragment of Korean business unit’s stake. Additionally, the fast food giant is focusing quite a lot on its operations in China.

During last quarter, the company performed significantly well and reported a substantial increase in the sales after several quarters. After the disappointing performance, the revival of the company happens due to the untiring efforts of CEO Steve Easterbrook.

During the past few quarters, after the introduction of All-Day Breakfast the company was able to bolster up its sales. Moreover, the fast food behemoth is trying to strengthen its business across the globe. According to the most recent news, Easterbrook has his eyes set on the China region to expand the company’s business. Even after going through a terrible food scandal in China, McDonald’s is planning to set up more than 1,000 outlets in China. All in all, over the next five years, the company is planning to open up around 1,500 outlets in different regions of Asia including Hong Kong, China, and Korea. In the last press release, the CEO cited: “These actions build on our turnaround efforts and will advance local ownership, enable faster decision-making and achieve restaurant growth.”

Out of the 119 international markets, around 60% of such markets are operated by the local franchises or partnerships. Since, the company has now been on the watch for the local partnerships in Korea therefore it is likely that the company is partially surrendering its direct ownership. The Golden Arches currently have 415 outlets, most of which are owned and run by the company itself but now it is more likely that the company might put them up for sale to a strategic partner.

The $115 billion organization has also put up its Japanese business unit for sale. The company has more than 2,900 outlets in the region majority of which are company operated or owned.

For the time being, it is still unknown about the extent to which the company intends to sell its Korean business. Therefore, the financial impact of this move on the company cannot be determined. Rival Burger King has also previously sold their stake in Korea to Affinity Equity Partners –a Hong-Kong based private equity firm for around $182 billion.

Amidst the announcement of expansion plan in Asia, McDonald’s current move seems a bit confusing however the time will tell how the initiative will turn out for the company.

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