Yum's mainland stake sale 'postponed'
|A boy plays at a KFC restaurant in Nantong, Jiangsu province. Yum Brands Inc, owner of KFC and Pizza Hut chains, gets more than half of its revenue from China. [Photo / China Daily]|
The sale process for a stake in Yum! Brands Inc’s Chinese mainland business, which operates KFC and Pizza Hut eateries in the country, has been delayed, people with knowledge of the matter said.
Potential bidders including Singapore’s state investment company Temasek Holdings Pte and Chinese private equity firm Primavera Capital Ltd missed a deadline earlier this month to submit offers for a minority stake in the business, the people said. The suitors held off submitting bids after Yum sought to impose new terms on the investments, said one of the people, who asked not to be identified because the information is private.
The investors also indicated they disagree with Yum’s proposed valuation of $10 billion for the China unit, the people said. The sale process has been delayed by at least several weeks, according to one person.
Yum last year bowed to activist pressure and agreed to separate its Chinese mainland business from the rest of the company, in part to focus on reviving its US operations.
Under the stricter terms, Yum wouldn’t be obliged to pay royalties to the mainland business to use any new products developed in the country, according to one of the people. Yum also said it wouldn’t share the burden for some of the Chinese unit’s ad spending, the person said.
Yum informed the investors of the new conditions just days before the bid deadline, the person said. The company had aimed to grant exclusive negotiating rights to one bidder after examining the offers, according to the person.