CITIC Ltd. (00267.HK), CITIC Capital Holdings Ltd. and Carlyle Group LP (CG.NASDAQ) (collectively referred to as the “acquirers”) recently purchased controlling equities in McDonald's (MCD.NYSE) businesses in mainland China and Hong Kong, via Grand Foods Investment Holdings Ltd. (an offshore special purpose vehicle (SPV) founded by the acquirers). Zhong Lun Law Firm acted as the Chinese legal advisor to the acquirers, with its partner ZHANG Shiwei appointed as the head of the advisors team; Kirkland & Ellis LLP acted as the overseas legal advisor to the acquirers, with its Hong Kong office partners, Jesse Sheley, Pierre Arsenault and LIN Xiaoxi, and Chicago office partners, Jeffery Norman and Mike Carew, designated to lead the advisors team. 

The acquirers, via the said offshore SPV, signed a share purchase agreement with McDonald's foreign subsidiary on Jan. 9 2017, to acquire all shares issued by McDonald’s China Management Ltd. (the “target company”) and its affiliates (McDonald’s business entities in the mainland and Hong Kong) at a total price of up to US$ 2.08 billion (HK$ 16.141 billion). After the deal, the acquirers and McDonald’s will indirectly own 80% and 20%, respectively, of the total equity in the target company. Specifically, CITIC Ltd., CITIC Capital and Carlyle Group will hold 32%, 20% and 28% equities. According to the master franchise agreement between the parties, once the transactions are complete, the aforementioned subsidiary will be granted with the master franchise for operating McDonald’s stores on the mainland and in Hong Kong for 20 years, and the parties involved in the deal will operate and manage approximately 2,700 McDonald’s stores in the mainland and Hong Kong. Therefore, the deal will become McDonald’s largest franchise transaction outside the US market.