Yum to sell stake in China business for $460 million
KFC and Pizza Hut owner Yum Brands Inc says Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding Ltd will buy a stake in Yum China for $460 million as Yum prepares to spin off the business.
The deal gives Primavera, a powerful Chinafocused private equity firm founded by an ex-Goldman Sachs banker, a significant stake in Yum’s China business.
It also further expands the reach of Ant Financial, which runs Alibaba’s Alipay mobile payments platform and has been expanding into China’s restaurant industry.
The investors will receive warrants to buy an additional four percent stake in Yum China in two tranches at valuations of $12 billion and $15 billion, the company said on Friday.
A Yum spokesman said the use of the proceeds from the deal will be determined by the future Yum China board of directors.
Yum has signalled that part of the money could go toward expanding across China, as the company signalled last October that it hoped to nearly triple the amount of its restaurants in China to 20 000.
KFC and Pizza Hut brands reaped the rewards of catering to China’s booming economy, with patrons flooding the restaurants that offered fast Western food, a higher level of service and perceived food safety.
But Yum’s China business has hit road blocks in recent years, including a scandal at a minor meat supplier and bird flu outbreaks.
Yum, still the largest fast-food chain in China, has also been losing ground to McDonald’s Corp.
The Louisville, Kentucky-based company’s move to separate its China business followed pressure last year from one of its largest investors, Corvex Management, the activist hedge fund run by Keith Meister. Meister is on Yum’s board.
The spinoff is expected on October 31, with Yum China to begin trading on the New York Stock Exchange a day later, the company said on Friday.
Primavera will invest $410 million, while Ant Financial, which runs Alibaba’s Alipay mobile payments platform, will put in $50 million. China’s sovereign wealth fund and New York private equity firm KKR & Co were also in the hunt for a Yum China stake.
Primavera’s founder, Fred Hu, will become nonexecutive chairman of Yum China’s board.
Goldman Sachs is financial adviser, while Wachtell, Lipton, Rosen & Katz are legal adviser to Yum Brands and Yum China. Simpson Thacher & Bartlett LLP and Fangda Partners are legal advisers to Primavera and Ant. — Reuters JOHANNESBURG — South African markets rose across the board on Friday, after weaker than expected US jobs data reduced prospects of an imminent rate hike in the world’s largest economy, sending investors on the hunt for high-yielding but riskier assets.
The rand scaled a session high of 14.3600 to the greenback after the US data, but retreated to 14.4600 by 1508 GMT. This was still up 0.97 percent from Thursday’s close at 14.6015 in New York.
“It now seems less likely that there will be an interest rate hike in September, so people will be looking for yield in emerging markets,” said Cratos Capital equities trader Greg Davies.
The rand is however still down 7 percent against the dollar since August 23, weighed down by fears that Finance Minister Pravin Gordhan could be charged over the activities of a surveillance unit set up when he was head of the tax department, which police say illegally spied on politicians.
Government bonds also closed firmer, with the yield on debt maturing in 2026, the market benchmark, shedding 6.5 basis points to 8.94 percent. — Reuters