In July 2017, McDonald's entered into a strategic partnership with CITIC and Carlyle*** to develop its business in mainland China and Hong Kong.

CITIC Group holds a 52% controlling stake in the new McDonald's China*** through a subsidiary, while Carlyle and McDonald's hold 28% and 20% stakes, respectively, speeding up the decision-making process.

CITIC (SEHK:00267, "CITIC"), CITIC Capital Holdings ("CITIC Capital"), Carlyle Investment Group (NASDAQ:CG, "Carlyle ") and McDonald's (NYSE:MCD) today jointly announced a strategic partnership and the formation of a new company that will be McDonald's master franchisee in Mainland China and Hong Kong for the next two decades.

The new company will acquire McDonald's businesses in mainland China and Hong Kong for a total consideration of up to US$2.08 billion (approximately HK$16.14 billion). The purchase consideration will be settled partly in cash and partly by the issue of new shares of the new company to McDonald's. Upon completion of the transaction, CITIC and CITIC Capital will hold a controlling stake of ***52% in the new company, with Carlyle and McDonald's holding 28% and 20% respectively.

Contents of the strategic cooperation between McDonald's Corporation and CITIC and Carlyle:

The parties will fully utilize their own resources and strengths to further develop the business of McDonald's, including the opening of new restaurants (especially in tier 3 and tier 4 cities), boosting the sales of existing restaurants as well as expanding and enhancing the business in the areas of menu innovation, convenient services, digital retailing, takeaway and other areas of expansion and enhancement. It expects to open more than 1,500 new restaurants in mainland China and Hong Kong over the next five years.

McDonald's Chief Executive Officer Steve Easterbrook said the company will continue to expand its sales in the next five years. Mr. Steve Easterbrook, Chief Executive Officer of McDonald's, said, "The Mainland China and Hong Kong markets present tremendous opportunities. McDonald's is one of the most recognizable brands in the world and a benchmark for quality in the industry. Our partners have a proven track record and a comprehensive understanding of the Chinese market. Together, all parties can further enhance our competitiveness and achieve rapid business growth, enabling McDonald's to become a leader in the fast food industry in Mainland China and Hong Kong and better serve our customers."

The domestic consumer sector is growing rapidly as China continues to urbanize, the middle class continues to expand and household disposable income increases. China's employed population is larger than that of the United States and Europe combined, but there is still a large gap between the consumption levels of the middle class and those of developed countries. With the growth of disposable income, Chinese residents will continue to increase their spending on leisure and food and beverage, and the market potential in third- and fourth-tier cities is particularly huge. Therefore, it is expected that the western fast food market will still maintain rapid growth.

Consumption demand will become an important driving force for China's economic growth in the future, and this transaction is a practical step forward for CITIC's layout of the consumer sector, as well as another step in CITIC's strategy of practicing a more balanced development of finance and industry. At the same time, the cooperation with McDonald's can also better utilize the synergies between the two businesses.

Mr. Chang Zhenming, Chairman of CITIC, said: "With its unique platform and rich resources, CITIC is confident that we can further tap into the full range of McDonald's values. Together with our partners, we will uphold McDonald's consistently high standards and rigorous requirements and continue to provide consumers with high-quality food and services. More importantly, this partnership is a good opportunity for CITIC to expand its presence in the consumer sector. McDonald's vast network and consumer base are unparalleled resources that will contribute to the future development of CITIC's business."