Bottom line: Yum and McDonald’s are likely to complete spin-offs of their China units by year end, offering a new business template for multinationals that should be encouraged with incentives from Beijing.
Yum names board for China unit
Separate plans by fast food giants KFC and McDonald’s (NYSE: MCD) to spin off their China businesses into separate companies were in the headlines last week, in a new trend that could see other big multinationals take similar steps to address the market’s huge size and unique qualities. Each company is using a slightly different strategy, with KFC parent Yum Brands (NYSE: YUM) choosing a key strategic partner and separate listing for its China unit. By comparison, McDonald’s is simply selling its China stores to a strategic partner in a franchise-style arrangement, while maintaining control of its bigger China operations. Read Full Post…
Bottom line: McDonald’s is likely to choose a buyer for its China stores in the next 2 months, while China Foods’ decision to sell its stakes in several Coca-Cola bottling plants is probably a simple business decision that reflects changing priorities.
McDonald’s near a sale of China stores
Two western consumer giants are in the headlines of China’s rapidly shifting corporate landscape, led by word that the list of bidders vying to buy McDonald’s (NYSE: MCD) 1,650 China restaurants has been narrowed to 2. The other headline has one of Coca-Cola’s (NYSE: KO) top China business partners, China Foods (HKEx: 506), announcing its intent to dump its stake in several local bottling joint ventures.
Each of these stories illustrates the vital role that local partners play in the operations of foreign companies doing business in China. McDonald’s has largely owned and operated its thousands of China stores independently since entering the market in the early 1990s. But it wants to find one or more local partners to take over those operations as it moves to a more franchise-style model. Coca-Cola also uses a franchise model for the companies that bottle its trademark drinks that include Coke, as well as Sprite and many others. Read Full Post…
Bottom line: Sanpower’s bid to become McDonald’s main China franchise partner looks like a long-shot, and China Resources or Beijing Capital Agribusiness are the most likely to emerge as winners in a deal valued at $2-$3 billion.
Sanpower eyes McDonald’s
What does global fast-food giant McDonald’s (NYSE: MCD) have in common with niche retailers Brookstone of the US and Britain’s House of Fraser? The answer: All 3 could soon become linked through Chinese conglomerate SanpowerGroup, while already owns the 2 niche retailers and is now making a much bigger bid for most of the McDonald’s stores in China and Hong Kong. Sanpower is the latest company to enter the bidding for the China McDonald’s stores, which are being sold as the US fast food giant moves to a franchise model in the market to replace its previous approach of self-owned stores. Read Full Post…
The following press releases and news reports about China companies were carried on June 24. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
MIIT to Forbid Non-telcos from Providing Free Enterprise Voice Calling – Reports (English article)
Sanpower Group Enters Bidding for McDonald’s (NYSE: MCD) China Stores (Chinese article)
Qunar (Nasdaq: QUNR) Announces Receipt of “Going Private” Proposal (GlobeNewswire)
Mango TV Raises 1.5 Bln Yuan in Second Funding Round, Valuation Doubles (Chinese article)
Huawei Lowers 2016 Smartphone Target by 20 Mln Units – Report (Chinese article)
Bottom line: Dianping or Meituan is likely to mount an IPO bid next year, in a deal that could value either at around $5-10 billion and win a premium as China’s first group buying site to list.
Meituan gets new mega-funding
China’s newly consolidated group buying sector could be close to making its first IPO, with word that leading operator Meituan is on the cusp of landing a massive $700 million in new funding. Such a huge amount would be the company’s fourth round of funding since 2010, and would follow not long after it reportedly raised $300 million earlier this year. That kind of funding frenzy often comes just before an IPO, which leads me to expect we could finally see Meituan become China’s first publicly listed group buying Internet company with a New York IPO perhaps in the first half of next year. Read Full Post…
The end has finally come for group buying site LaShou, though this former Internet superstar survived for far longer than I ever imagined it would before its newly announced acquisition by conglomerate SanPower Group, which owns a number of online and offline retail brands. Of course this acquisition doesn’t mean the actual death of LaShou, and it’s quite possible the company could still make a comeback under its new ownership. But its acquisition marks one of the final big consolidation moves for a group buying sector that saw explosive growth 3 years ago, followed by a major correction that saw most companies either close or get acquired. Read Full Post…
The following press releases and media reports about Chinese companies were carried on October 21. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
China’s M&A Watchdog Halves Time Taken To Approve Deals (English article)
Apple (Nasdaq: AAPL) In Talks With UnionPay, Other For Apple Pay In China (Chinese article)
China Mobile (HKEx: 941) Reports Results For First 3 Quarters (HKEx announcement)
Tesla (Nasdaq: TSLA) Tries Tmall, To Take Part In Single’s Day Promotion (Chinese article)
SanPower Group Acquires Group Buying Site LaShou (Chinese article)
