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| A McDonald's branch in Seoul / Newsis |
By Anna J. Park
While major burger franchises in Korea, including Mom's Touch and Burger King Korea, are expected to be put up for sale soon, McDonald's Korea has become the first to officially initiate the selling process.
According to the investment industry Tuesday, Mirae Asset Securities ― the organizer of the sale of McDonald's Korea ― has recently sent an investment teaser letter to potential buyers. The 100 percent stake in McDonald's Korea held by McDonald's APMEA Singapore Investments will be up for sale.
The 13-page letter stressed the dominant market position of McDonald's Korea in the domestic burger market, as well as its further growth potential.
The document stated that McDonald's Korea maintains the top market share in the local franchise burger industry, despite the fact that McDonald's operates only about 400 branches nationwide. The number of branches across the country is way smaller than those of its competitors like Mom's Touch and Lotteria, which each operate over 1,300 branches in the country. Burger King also operates about 430 branches in Korea. This means that each branch of McDonald's posts higher revenues on average than its competitors.
The letter also said that the average revenue of each branch has grown by 8 percent per year over the past three years, showing further upside potential of the business. It also stated that the global burger chain's net loss was reduced to 33.3 billion won ($24.2 million) last year, a 28 percent year-on-year decrease. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) ― turned around 4.6 billion won in profit last year.
What is also noteworthy is that McDonald's Korea owns considerable real estate assets as well.
Mirae Asset is planning to send out an information memorandum (IM) with more details to prospective buyers later this month. The sale's preliminary bidding is expected to be held sometime next month, followed by due diligence until early December.
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