Why McDonald’s Wants to Sell a Big Stake in Its Japan Business

By Paul Ausick Updated Jan 12, 3:55PM EST · Published Jan 12, 12:50PM EST

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Why McDonald’s Wants to Sell a Big Stake in Its Japan Business — © courtesy of McDonald's Corp.

[cnxvideo id=”508518″ placement=”ros”]Had it not been for a solid fourth quarter, the world’s largest fast-food company, McDonald’s Corp. (NYSE: MCD) would likely have shown no year-over-year profit growth. As it is analysts are expecting full-year revenues to drop more than 3% compared with 2015.

The Wall Street Journal reported Thursday that the company is currently seeking bids for a “significant stake” in McDonald’s Japan unit. The Tokyo-listed subsidiary has a reported market cap of around $3.5 billion, and McDonald’s owns just less than 50% of the shares. The U.S.-based company is shopping a 33% stake in the unit, meaning it would cut its own stake to less than 19%.

Earlier this week the company said it is selling an 80% stake in its China operations to a group that includes a number of Citic subsidiaries and the Carlyle Group L.P. (NASDAQ: CG). According to The Wall Street Journal, the sale would value McDonald’s Chinese business at $2.08 billion. The Citic companies would own a controlling 52% stake in the business and Carlyle, would own 28%. McDonald’s would retain the remaining 20%.

[nativounit]

McDonald’s has been selling company-owned stores at a rapid clip over the past two years, with most of the buyers being franchise holders. Large sales like those of the China- and Japan-based variety are likelier to find buyers among private equity firms.

By 2018, according to the Wall Street Journal, McDonald’s expects to shed 4,000 company-owned stores to franchisees and wind up with corporate ownership of just 5% of the more than 36,000 global retail stores under the golden arches.

McDonald’s stock traded up about 0.3% in the noon-hour Thursday, at $121.19 in a 52-week range of $110.33 to $131.96. The consensus 12-month price target is $128.08.

[wallst_email_signup]

DISCLOSURE:

Customer must fund their Active Invest account with at least $50 within 45 days of opening the account. Receive a minimum of $15. Probability of member receiving $3,000 is a probability of 0.026% If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Percentages for the $3,000 are subject to decrease. See full terms and conditions.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org). Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 30 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees. Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org). There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation.

Follow 24/7 Wall St. on Google

About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.