Yum! Brands to Spin Off Its China Operation

Company strives to become a pure-play franchisor.

In a deal that should pave the way for the multiconcept operator to become more of a pure-play franchisor of restaurants, Yum! Brands, Inc. (YUM) plans to separate into two independent, publicly traded companies. Yum! China will become a franchisee of Yum! Brands in Mainland China with exclusive rights to three concepts: KFC, Pizza Hut and Taco Bell, the last of which is not yet in China. The deal is expected to close by the end of 2016.

In addition, effective January 2016, the company’s India business will integrate its three major restaurant brands into the global KFC, Pizza Hut and Taco Bell divisions of Yum! Brands, as the franchisor moves to organizational alignment by brand, rather than by geography.

Upon completion of the separation, David Creed, chief executive officer, will lead Yum! Brands.Micky Pant, who was named CEO in August, will lead Yum! China.

Yum! China is expected to have no significant debt and the financial capacity to invest in its business, according to a company release. The company has approximately 6,900 restaurants today.

Yum! Brands plans to have at least 95 percent of its restaurants owned and operated by franchisees by the end of 2017. The multiconcept operator has a global base of more than 41,000 restaurants.

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