Restaurant Brands International Inc. (NYSE: QSR), the fast-food holding company, announced two strategic transactions in China, reinforcing its confidence in one of the largest quick-service restaurant markets worldwide.
The company has acquired Popeyes China and co-invested with Cartesian Capital in TH International Limited (NASDAQ: THCH), also known as Tims China.
Restaurant Brands' total capital outlay for these transactions will be up to $45 million. The acquisition of Popeyes China, valued at $15 million, includes 14 restaurants in Shanghai.
Restaurant Brands plans to accelerate restaurant growth through investments in local teams and development, with a long-term goal of establishing local partnerships for a master franchise model.
To support the expansion of Tims China, Restaurant Brands and Cartesian Capital will invest up to $50 million through three-year convertible notes.
Of this, $40 million will be issued at closing, and the remaining $10 million will be funded over the next seven months, contingent on operational and financial conditions.
This investment will increase Restaurant Brands' equity ownership in Tims China to up to 18% and allow it to appoint two directors to the Tims China Board.
Rafael Odorizzi, President of Asia Pacific, said, "China is one of the most compelling long-term market opportunities for both our Popeyes and Tim Hortons brands. Popeyes China is off to a strong start and we are excited to unlock its development potential in one of the largest chicken QSR markets globally."
"Today's announcement allows Tims China to redouble its focus on quality restaurant development and providing Chinese consumers with our high quality Tims coffee and food offerings."
Price Action: QSR shares are trading lower by 0.16% at $70.26 at last check Monday.