McDonald's in talks to sell Singapore, Malaysia franchise rights to investors

The McDonald's outlet at East Coast Seafood Centre.
The McDonald's outlet at East Coast Seafood Centre.PHOTO: ST FILE

MUMBAI (BLOOMBERG) - McDonald's is in advanced talks to sell Southeast Asia franchise rights to a group of investors including Saudi Arabia's Reza Group, people with knowledge of the matter said.

The sale of 20-year McDonald's franchise rights in Malaysia and Singapore could fetch more than US$400 million (S$547.4 million), one of the people said, asking not to be identified because the information is private.

McDonald's is seeking local partners to run its restaurants in Malaysia and Singapore as it pursues an international turnaround plan put in place after Chief Executive Officer Steve Easterbrook took over last year. The Big Mac maker, which has a US$97 billion market value, is revamping its ownership structure throughout Asia, including plans to sell operations in China, Hong Kong and South Korea.

The Alireza family, which calls itself one of the oldest trading families in Saudi Arabia, owns and operates McDonald's restaurants in the western and southern parts of the kingdom through Reza Food Services, according to the company website. The group has about 20 businesses across sectors like manufacturing, construction, chemicals, logistics and partners with companies including Exxon Mobil Corp.

There's no certainty the talks will result in a deal, and another buyer could still emerge, according to the people. A US-based representative for McDonald's didn't respond to a request for comment, while Reza Group wasn't immediately available for comment.

Unlike in its other major markets, including the US, most McDonald's outlets in Asia are company-owned. The restaurant chain aims eventually to have 95 per cent of its outlets in the region under local ownership, it said in March.