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. Last Updated: 07/27/2016

Moscow Reduces Stake in McDonald's

McDonald's has boosted its stake in its fast-food joint venture with the Moscow city government, apparently making good on its longstanding plans to become the majority owner.


Pavel Ryabov, the chain's local public relations manager, said a deal to acquire shares from the city had been reached, but he declined to provide details.


"The deal was signed last November," Ryabov said. "It's been confidential information since then. Both sides agreed not to disclose it to the public since it does not affect the services we provide."


The daily Moskovsky Komsomolets reported Saturday that the city's stake had decreased to 20 percent from 51 percent.


It said the government intends to reinvest the capital from the sale into the Russkoye Bistro fast-food chain, which has been touted as a Russian alternative to McDonald's.


Ryabov said McDonald's may provide more information Friday at a public relations event.


A Moscow city government spokesman, Yury Zagrebnoi, confirmed Monday a transfer of shares to its partner, but declined to elaborate.


Another city official, however, disputed details of the Moskovsky Komsomolets report. "There have been negotiations about the possible transfer of the shares, but nothing has actually happened yet," said Anzor Margania, director of Mosrestoranservis, the city organization that oversees joint-venture restaurants in the city. "I cannot confirm this information."


As far back as 1992, the city had agreed eventually to transfer a majority share to McDonald's Canada, company officials have said.


McDonald's officials have said the company has supplied virtually all of the hard-currency investment, while the city has provided only locations and building sites. Total investment has reached about $80 million, Ryabov said.


The company's move to take control of the Moscow operation bucks a recent trend in which Russians have forced their Western partners out of successful joint ventures. In one prominent case last year, Russian shareholders took outright control of the Arbat Irish House retail complex from the Irish partners.


The city government also has battled with the Americom Business Center, the largest minority shareholder, for control of the Radisson-Slavjanskaya hotel.


The McDonald's joint venture was launched in 1988 when McDonald's Restaurant of Canada Ltd. signed a deal with the city government to build 20 fast food restaurants in the capital. The first Russian McDonald's, which opened on Pushkin Square in January 1990, remains the world's busiest, serving 40,000 customers daily. The company's five Moscow outlets have served 114 million customers since 1990.


The company says all its local profits are reinvested in local operations.


McDonald's has opened four restaurants within past three years and plans to open five more this year. The company also operates a farm, a food processing center and a 12-story office building on Tverskaya Ulitsa


The venture now employs 2,200 people, with only four foreigners among them, Ryabov said.