Customers wait for their takeout food outside a McDonald’s restaurant during the May Day holiday on May 1, 2022 in Beijing, China.

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McDonald’s is buying Carlyle’s stake in its China business, increasing its minority share from 20% to 48% ownership.

The fast-food giant sold off control of its restaurants in mainland China, Hong Kong and Macao in 2017 for $2.1 billion. It was part of McDonald’s broader strategy to own fewer restaurants, leaving it to franchisees with knowledge of local markets to run their own locations.

At that time, Citic, a state-owned investment firm, took the majority stake, while private equity giant Carlyle bought a 28% stake. McDonald’s held on to 20% of the business.

Financial terms of the deal announced Monday were not disclosed. The deal is expected to close in the first quarter of 2024, assuming regulators approve it. Citic still retains its 52% stake in the business.

“We believe there is no better time to simplify our structure, given the tremendous opportunity to capture increased demand and further benefit from our fastest growing market’s long-term potential,” McDonald’s CEO Chris Kempczinski said in a statement.

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Since 2017, McDonald’s has doubled its footprint in China to more than 5,500, making the market its second largest by number of locations. The chain aims to reach 10,000 restaurants by 2028.

But McDonald’s sales in China have struggled since the Covid pandemic began. The country accounts for about 4% of the chain’s total revenue, down 3.8% from the year prior, according to Factset estimates.

On McDonald’s latest earnings call, Kempczinski noted that China is dealing with “slowing macroeconomic conditions and historically low consumer sentiment,” although the chain is drawing in customers by promoting its burgers.

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