Yum! linked to KKR talks over sale of China division

By Oscar Rousseau

- Last updated on GMT

Yum! Brands plans to separate from its China arm to turnaround ailing fortunes
Yum! Brands plans to separate from its China arm to turnaround ailing fortunes

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Fast-food giant Yum! Brands, owner of KFC, Taco Bell and Pizza Hut, is rumoured to be in early negotiations with US equity firm KKR over the sale of a minority stake in its Chinese division. 

As well as private equity firm KKR, it is believed that another private equity company, Hopu Investment, is also interested in acquiring the China arm from the US-based food corporation.

The spin-off of Yum! Brands was announced back in October 2015. At the time, the $32bn fast-food behemoth announced plans to divide itself into two publicly traded companies, with plans for the Chinese to operate separately from the rest of the global franchise.

‘Good progress’

The company’s talks with interested parties are believed to be at an early stage and a deal is not guaranteed. However, the company’s board of directors has made it clear they expect its China arm to be a privately listed company on the New York Stock exchange by the end of 2016.

In a statement received by Reuters, but widely published online, a Yum! Brands spokesman said: “We continue to make good progress since we announced the transaction separating Yum! and Yum China. We will provide updates on the transaction at appropriate times and we won’t comment on rumours or speculation.​”

The divide of Yum! Brands is believed to be down to a number of factors, including several years of declining sales in the corporation’s biggest market, China. Between July and September 2015, the Chinese market accounted for 57% of Yum!’s overall business, according to analysts​, but it still experienced a decline.

Sales have been particularly hit by a meat safety scandal that swept through the fast food industry in China. GlobalMeatNews reported in February that 10 employees from US firm OSI were imprisoned for repackaging and selling expired meat​, which may have found its way into McDonald’s and KFC.

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