McDonald’s, world’s largest fast-food restaurant chain, is looking for a strategic partner in South Korea to oversee operation in Korea in a second attempt after a botched deal six years ago.
According to multiple sources from the investment bank on Thursday, McDonald’s headquarters in the United States has recently hired Mirae Asset Securities as its advisor to find a business operator in Korea. The deal would involve a full stake in McDonald’s Korea owned by McDonald’s APMEA Singapore Investment Pte. Ltd. and business rights in Korea.
The seller is expected to send out teaser letters to potential buyers as early as next month.
“McDonald’s Korea, upon headquarter request, has been seeking to find an advisor in Korea since early this year,” said an unnamed industry official.
In 2016, the fast food restaurant chain chose Morgan Stanley to sell the stake. Negotiations went on for a lengthy period with a Maeil Dairies-Carlyle Group consortium, but did not end in a deal.
McDonald’s is renewing the search to raise funds, or the headquarters could be considering the Korean operation as non-core asset, according to the sources.
McDonald’s has been out in the market for a long time and terms for sale would not have changed much from 2016, one source said.
McDonald’s Korea was established as a limited company in 1986. Last year, it logged an operating loss of 27.7 billion won ($21.9 million) and net loss of 34.9 billion won on sales of 867.8 billion won.
It is the biggest hamburger franchise in Korea by sales but the business has been losing money. In 2020, McDonald’s Korea suffered 48.3 billion won in operating loss and 66.1 billion won in net loss amid rising burden from raw materials, labor, and delivery costs.
While the headquarters is offering its stake, it hopes to maintain influence for royalty and quality control.
McDonald’s Korea paid 50.1 billion won and 54.3 billion won in royalty to the headquarters in 2020 and 2021 respectively.
McDonald’s Korea is emphasizing that it is looking for a “strategic partner” in Korea that can help grow the brand.
By Kang Woo-seok, Cho Yoon-hee, and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]