McDonalds considers downsizing stake in struggling Japanese unit

Kyodo, Bloomberg

McDonald’s Corp. is considering selling part of its stake in its Japanese unit, sources familiar with the matter said Tuesday.

The U.S. fast food chain, which owns roughly 50 percent of McDonald’s Holdings Co. (Japan), is apparently seeking to weaken its control over the Japanese unit, with potential buyers including investment funds, the sources added. The sale could generate ¥100 billion ($825 million).

On the Jasdaq market for startup firms, shares in the Japan unit fell ¥231, or 7.8 percent, to ¥2,712.

Kokoro Toyama, a spokeswoman for McDonald’s in Japan, said the company cannot comment at the moment.

Capitalized at around ¥390 billion, McDonald’s Holdings has morphed into one of the leading fast food chains in Japan since its establishment in the country in 1971.

But some industry observers believe the company is overvalued in terms of profitability.

McDonald’s Holdings has been struggling to win back customers since a series of safety scandals emerged in recent years.

Such scandals have involved a food supplier in China and inedible objects found in its food. The chain is closing unprofitable stores in Japan as part of restructuring, with plans to shutter 131 stores this year.

The Japan unit has forecast a ¥38 billion loss in 2015 compared with a ¥21.8 billion loss a year ago.

The Japanese unit’s delay in catering to diversifying customer needs has been partly blamed on McDonald’s influence on management policy.

For the current business year through Dec. 31, McDonald’s Holdings is expecting a group net loss of ¥38 billion.