Little Sheep dressed for Yum! takeover
Yum! Brands, the world's biggest operator of fast food restaurants, will complete its takeover and privatisation of Little Sheep Group next week after getting the go-ahead to withdraw the Chinese hotpot chain's shares from Hong Kong's main board.
In a joint announcement yesterday, Little Sheep, Yum! Brands and its wholly owned subsidiary Wandle Investments said the Hong Kong stock exchange had approved the withdrawal of listing with effect from 4pm on February 2.
United States-based Yum! Brands, owner of the popular KFC and Pizza Hut fast food chains, said its HK$4.4 billion buyout deal was sanctioned last Friday by the Grand Court of the Cayman Islands, where Little Sheep is incorporated.
That followed the privatisation scheme's approval by independent shareholders of Little Sheep at an extraordinary general meeting held on January 6. The company, founded in Inner Mongolia in 1999, went public in Hong Kong in 2008. Yum! Brands, through Wandle Investments, is offering HK$6.50 per share in a deal that values Little Sheep at HK$6.7 billion. This will raise its stake in the mainland's leading hotpot chain to 93.2 per cent from 27.2 per cent.
The acquisition is expected to expand Little Sheep's business and further develop the mainland operations of Yum! Brands. The US firm has more than 36,000 restaurants in more than 110 countries and territories.
'We have a strong commitment to the China market and to the Little Sheep brand,' Yum! China chairman and chief executive Samuel Su Jing-shyh said earlier this month. 'We are confident we can further strengthen Little Sheep's brand, business model and market position.'
Yum! Brands is already the leading fast food chain operator on the mainland, with nearly 4,200 restaurants in more than 700 cities. KFC, which was the first fast food chain to enter the China market, in 1987, has almost 3,500 restaurants across the mainland. It also runs more than 560 Pizza Hut outlets and 20-plus East Dawning restaurants on the mainland. East Dawning represents the US company's attempt to serve selected Chinese cuisine, such as dumplings, in a fast food format similar to the KFC business model.
Little Sheep, which had 192 directly owned and 277 franchised restaurants as of June last year, is famous for its Mongolian-style mutton dishes. Founders Zhang Gang and Chen Hongkai will remain minority shareholders after the privatisation is completed.