McDonald’s To Sell Russian Businesses – Will Stocks Fall?
Near the start of the Russia-Ukraine war, McDonald’s Corporation paused operations and temporarily closed restaurants in Russia. On Monday, May 16, the fast-food giant announced it will sell its Russian business and exit the market permanently.
The corporation wrote in a statement:
“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.”
The company is pursuing the sale of its entire portfolio to a local buyer, the statement said. Following the sale, the locations will not be permitted to use the McDonald’s name, logo, branding or menu. The company will, however, retain its trademarks in the country.
Further, McDonald’s said that it will seek to ensure that current employees will be paid until the deal closes and that the employees will have the opportunity to continue working under the new ownership. Restaurants remain closed until the transaction is finalized.
Upon the news, McDonald’s stock dipped from $244.86 when the market opened Monday to $241.45 at 10 a.m. However, it continued to rise throughout the day and is hovering roughly mid-way between its 52-week high of $271 and low of $217.
As a dividend-paying stock with a solid history and good operating results for the first quarter of 2022, McDonald’s could be an investment that weathers a bear market well. The company saw a 12% boost in comparable-store sales in the first quarter, Nasdaq.com reported. And while earnings fell due to closing operations in Russia, the decision shows McDonald’s Corporation remains committed to its values and to its employees, even during a crisis.
In an article published at the beginning of May, Nasdaq.com wrote that McDonald’s “financial wins all start with delivering great values to fast-food fans. But they ultimately translate into solid returns for investors.”
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