Yum Brands continues to flourish across China, even opening its first KFC franchise in Tibet earlier this year, and now it has caught the watchful eye of the government.
Following its success on the Chinese mainland, the multinational fast food company, which includes KFC and Pizza Hut, recently underwent a management realignment, reforming mainland operations into a separate domestic company. This action was pressured by Yum Brands board member and activist investor, Keith Meister.
A consortium, including KKR & Co and Baring Private Equity Asia, is considering buying Yum China, according to a CNBC report. The investor group is backed by China Investment Corporation(CIC), the country’s sovereign wealth fund responsible for investing from national currency reserves, and estimates the value of Yum China at $7 billion to $8 billion.
Meister, however, finds these numbers unsatisfactory:
My sense is the Yum board will do the right thing. I will tell you as a large shareholder, the Yum board selling this business for $7 or $8 billion is not the right thing, and I don’t think there’s anyone who would disagree about that.
While KFC in China had to fight back false rumors of mutant chicken, Yum continues to see success on the mainland. A report released Wednesday by the fast food company states Yum has 7,205 stores in China, 5,019 of them being KFC franchises. Yum China accounted for nearly half of total revenues with a staggering $1.3 billion dollars in the first quarter of 2016 alone. Subsidiary Taco Bell is also planning a return to China after an eight year absence.
Hopefully they don’t start trying strong-arm tactics to get the Colonel to make the sale, like they did with Ronald.
By Matthew Patel