McDonald’s said to be selling Asian franchise to Saudi group

Fast food giant McDonald’s is set to sell its 20-year franchise rights for outlets in Singapore and Malaysia to Saudi Arabia’s Reza Group, in a deal that could be worth up to $400 million, Reuters reported citing sources familiar with the matter.

Malaysian lender CIMB will reportedly finance the transaction for Reza Food Services, which owns and operates McDonald’s restaurants in western and southern Saudi Arabia.

The bank will provide the bulk of the loan, and the financing will be denominated in both Malaysian ringgit and Singapore dollars.

McDonald’s is seeking tie-ups with local tycoons and family owned groups as it is looking for long-term partners rather than buyout firms, one of the sources said, adding that the basic terms of the agreement with Reza have been finalized.

The deal is anticipated to be completed by the end of 2016, the source added.

In July, Bloomberg reported that McDonald's was looking for franchise partners for its outlets in Singapore and Malaysia, and a potential bidder was in talks with banks for up to $300 million in funding.

The American firm has about 120 restaurants in Singapore and around 260 in Malaysia.