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McDonald's to sell Russia restaurants to local operator, rebrand

The new buyer will retain current employees for at least two years

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McDonald's Corp is selling its restaurants in Russia to one of its current local licensees, who will rebrand them under a new name, ending more than three decades of the "Golden Arches" in the country, the fast-food company said on Thursday.

The world's largest burger chain owns 84 per cent of its nearly 850 restaurants in Russia. Chicago-based McDonald's on Monday became one of the biggest global brands to exit Russia following its February military operation in Ukraine. McDonald's said it will retain its trademarks.

In March, McDonald's temporarily closed its restaurants in Russia including its first location in Pushkin Square - a symbol of American capitalism flourishing in the dying embers of the Soviet Union. McDonald's came to embody a thawing of Cold War tensions and was a way for millions of people to sample Western food and culture.

The McDonald's restaurants in Russia will be sold to Alexander Govor, who runs the franchise operation through his firm GiD LLC. Govor has been a McDonald's licensee since 2015 and had helped the chain expand into remote Siberia, where he operates 25 restaurants.

McDonald's and GiD declined to disclose financial terms of the deal. McDonald's had said it would take a non-cash charge of up to $1.4 billion following a sale.

Govor will retain employees for at least two years on equivalent terms, McDonald's said, and will pay employee salaries in 45 regions of Russia until the closure of the sale, which is expected in the coming weeks.

Russia's Industry and Trade Minister Denis Manturov said the deal followed a "long and difficult" negotiation process and the government would provide Govor all the necessary assistance to set up operations.

Interfax news agency's Spark database of Russian companies listed Govor as a co-owner of Siberian Distribution Centre, a rental company, and the Anzherskiy Oil Refinery. Govor also holds a 50 per cent stake in a small forestry company and 25 per cent in a fishing and hunting company, the database showed.

Earlier in the day, a local media report said one of the largest McDonald's franchisees in Russia, SPP, was a potential buyer. Its owner Kairat Boranbayev runs a McDonald's franchise in Kazakhstan and Belarus.

SPP did not immediately respond to a Reuters request for comment.

Several other Western brands, including Imperial Brands and Shell, have also agreed to sell their Russian assets or hand them over to local managers.

It was not clear what impact the McDonald's deal would have on its other major franchisee there, Rosinter Restaurants, and whether Rosinter would also need to rename the McDonald's restaurants it operates. Rosinter declined to comment.

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Russia's industry and trade ministry invited Russians to send in their suggestions for a new name.

"Write your versions in the comments!" the ministry wrote on its Telegram channel. "We will pass on the most creative and interesting ones to the Russian owner."

"MakDak" was a popular early suggestion among Telegram users.

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