Chinese fast food restaurant chain Da Niang Dumplings Holdings Ltd., which CVC Capital Partners bought out in 2013, is being sold to Chinese hotel group GreenTree Inns Hotel Management Group, Inc., according to a disclosure statement posted on the website of Ministry of Commerce’s anti-monopoly bureau.
A unit of GreenTree, a Shanghai-based budget hotel group, is to acquire 100% shares of Da Niang Dumplings, which operates over 400 restaurants across China. Financial details were not disclosed.
What’s noteworthy is that GreenTree is buying the shares from Da Niang Dumplings, not from CVC Capital, which means CVC may have sold its control stakes in Da Niang Dumplings prior to this deal.
CVC did not immediately respond to a China Money Network inquiry to clarify the facts.
Da Niang Dumplings, also known as Daniang Dumplings, suffered from mismanagement and declining performance following CVC’s acquisition of the the Changzhou, Jiangsu province-based chain.
The company’s founder Wu Guoqiang, who retained a 10% stake in Da Niang, said revenues declined by 10% in each of 2014 and 2015 because of cost cutting efforts initiated by CVC. It also welcomed three new CEOs in a span of three years.
Founded in 2004, GreenTree manages and franchises over 2,500 properties in and outside of China. The hotel group, with no prior experience in the food and restaurant businesses, was reportedly one of the bidders for McDonald’s China and Hong Kong unit, which was acquired by CITIC Group and the Carlyle Group earlier this month.
GreenTree could potentially realize synergies with Da Niang Dumplings as both businesses are targeting the lower end consumer market. But with no experience in the restaurant sector and new food concepts popping up around China, industry experts are cautious on the outlook of the transaction.