McDonald's to attempt second tender to shed Korean operations next month

[Photo by Yonhap]

The U.S. fast food giant McDonald’s is tapping more than 10 candidates among Korean private equity funds and midsized enterprises to sell the management rights in its Korean operation ahead of opening a preliminary tender next month amid rising labor costs and stiff food delivery competition.

According to the investment banking industry on Monday, Mirae Asset Securities is arranging a preliminary tender for a 100-percent stake in McDonalds’ Korean operation held by McD APMEA Singapore Investment next month at the earliest.

This is the second attempt by the American fast-food giant to shed its Korean operations after its failed negotiations in 2016 with a consortium of Maeil Dairies and the Carlyle Group, a global private equity firm, due to differences over the sale price.

McDonalds is expected to seek around 500 billion won ($366 million), similar to the offer of six years ago. Its valuation will likely include the book value of real estate properties.

McDonald’s Korea commands an overwhelming market dominance with the largest number of outlets in Korea among fast-food chain stores. The locations also appeal in real estate value.

McDonald’s has been one of the first American fast-food names to enter the country in 1986. Despite its leading position, it suffered an operating loss of 27.7 billion won in 2021 with a net loss of 34.9 billion won on sales of 867.8 billion won in sales due to high delivery service fees and soaring costs of labor and raw materials. Competition in the country’s fast-food sector has further intensified with a slew of new entrants to the market.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]