A McDonald's fast food restaurant sign is seen in Beijing on January 9, 2017. [Photo/VCG]

Fast-food giant McDonald's Corp is selling a controlling stake in its China business to a group of investors led by state-owned Chinese conglomerate Citic Ltd in a deal worth up to $2.1 billion, the companies said Monday.

The transaction is part of a global business overhaul being carried out by the American company to keep up with changing tastes that have resulted in declining sales.

Under the terms of the deal, Citic and its investment management unit Citic Capital will acquire 52 percent of the business while another partner, the Washington-based private equity firm Carlyle Group, will own 28 percent. McDonald's will retain a 20 percent stake. The deal will be settled in cash and in shares in the new company that will act as the master franchisee for a 20-year period.

About two-thirds of the China operation's 2,640 outlets, including 240 in Hong Kong, that are now owned by McDonald's will be refranchised. The China business employs more than 120,000 people.

The deal caps months of negotiations between the fast-food chain and private equity firms.

"McDonald's globally overall is struggling and didn't have the money or intellectual resources to focus on China," said Shaun Rein, managing director at China Market Research Group.

McDonald's originally wanted to raise up to $3 billion from the sale, but later decided to keep a minority stake to benefit from exposure to future growth in China, a person with direct knowledge of the plans previously told Reuters.

The partnership will also aim to boost sales at existing restaurants, with menu innovation a key focus. Fast-food firms including McDonald's and Yum Brands Inc are recovering from a series of food-supply scandals in China that have undermined their performance.

"I'm not sure how much more you can do with McDonald's in China. They're a well-run company, so I'm not sure that CITIC and Carlyle are able to add that much more aside from capital," Rein said.

McDonald's said in March it was reorganizing operations in the region, looking for strategic partners in Chinese mainland, Hong Kong and South Korea. The company later decided to keep its South Korea business.