|Girish Shetti |||Mar 24, 2016 11:43 AM EDT|
(Photo : Getty Images.) Yum Brands Plans to sell minority stake in its China business to a private equity firm, as company plans to split its China business later this year.
Yum Brands is in discussion with KKR and other private equity firms to sell a minority stake in its Chinese business as a part company's plan to spin off its Chinese business later this year.
Inside sources say that Yum Brands, which owns fast food restaurants like KFC and Pizza Hut, plans to sell 19.9 per cent stake in its Chinese unit at a valuation of $10bn.
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The decision to sell minority stake comes just few months after Yum Brands announced that it will spin off China business into two publicly traded companies - Yum! Brands and Yum! China. The decision to spilt Chinese operation is a strategic move by the company to stem its falling revenue in China.
The company has not given any time span to complete the spin off process, but sources say that it will be completed by end of 2016. Sources are also saying that Mr Micky Pant, who is currently company's CEO in China, will the head subsidiary company Yum! China.
Yum's revenue in China has been under severe stress following series of food scandals that has rocked the company over the years. The local Chinese press was particularly harsh on Yum. The regular media stories about bad food practices and improper food handling practices by a poultry supplier severely affected customer's footfall across Yum's restaurants.
Yum's KFC restaurants were especially at the forefront of taking the brunt when food scandal was at its peak. Although Yum Brands profit did improve during last few quarters, it could not reach to the level before series food scandals rocked company's business.
Experts say that other adverse factors like economic downturn, rise in labor cost and rise in local competition also greatly added to Yum's woes in China.
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