TPG said to exit race for US$2b McDonald's China business

[HONG KONG] TPG Capital has exited the race for the McDonald's Corp China operations, leaving two other foreign buyout firms to compete with local bidders in a sale that could fetch as much as US$2 billion, people with knowledge of the matter said.

Bain Capital has partnered with Chinese hotelier GreenTree Hospitality for its offer, while Carlyle Group teamed with Beijing-based conglomerate Citic Group Corp, according to the people, who asked not to be identified because the information is private.

TPG's erstwhile partner, Chinese grocery operator Wumart, is bidding on its own, the people said.

They are competing with dairy producer Beijing Sanyuan Foods Co, which has also been negotiating terms of a potential deal with McDonald's, according to the people.

McDonald's, which is selling 20-year mass franchise rights for China and Hong Kong, plans to pick a winner by mid-November, the people said.

The world's biggest restaurant chain is seeking to streamline its sprawling global operations and return to growth by revamping the ownership structure in markets such as China, South Korea and South-east Asia.

Chief executive officer Steve Easterbrook, who took the reins last year, is pursuing a turnaround plan to revive the company amid a sales slowdown in the US, its largest market.

McDonald's shares fell 0.5 per cent to US$112.11 at the close Wednesday in New York, extending this year's decline to 5.1 per cent.

Representatives for Bain, Carlyle, McDonald's and TPG declined to comment. A spokeswoman for Citic said she couldn't immediately comment.

Calls to the offices of Greentree and Wumart weren't answered.

A woman who answered the phone in the office of Beijing Sanyuan's board secretary said she couldn't comment and declined to transfer calls.

BLOOMBERG