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Yum China rejects $17.6bn buyout offer

Reuters reported last week that fast-food chain operator Yum China Holdings, which was spun off from Yum Brands! Inc in 2016 and listed on the New York Stock Exchange, has rejected a $17.6bn buyout offer from a consortium led by Chinese investment firm, Hillhouse Capital Group. The Hillhouse-led consortium, which would also include regional investment house Baring Private Equity Asia, expressed an interest to offer $46/share, or c. 24% above the 28 August closing price. Former Yum China chairman and CEO Sam Su serves as an operating partner at Hillhouse. Yum China is the exclusive licensee of the KFC, Pizza Hut and Taco Bell brands in China with over 8,100 restaurants in more than 1,200 cities. In addition to KFC, Pizza Hut and Taco Bell brands, Yum China also runs Chinese fast-food chain First East Dawning and hotpot restaurant Little Sheep which it acquired in 2012.

Reuters writes, quoting a person “familiar with the matter”, that the offer did not include detailed terms or the structure of the investor consortium, and the board decided it provided no extra value or strategy for the business. Chinese investment firm Primavera Capital and Ant Financial Services Group bought a minority stake in Yum China for $460mn as part of the spin-off deal in September 2016. Both are still shareholders in the company.

Yum China declined to comment on the report.

Yum was the first major Western fast-food company to enter China, opening a KFC store in central Beijing in 1987. Parent Yum Brands! currently collects 3% of KFC, Taco Bell and Pizza Hut China sales as royalties.



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