Yum to sell stake in China busi­ness for $460 mil­lion

Chronicle (Zimbabwe) - - Business -

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

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