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Reuters

Yum Brands intends to separate its China business into a publicly traded company, bowing to pressure from an activist shareholder.
Yum's shares rose nearly 6 per cent in premarket trading on Tuesday.
Yum China, the new entity, will become a franchise of Yum Brands in China and will pay a percentage of its sales to the parent company for exclusive rights to three of the company's brands - KFC, Pizza Hut and Taco Bell.
Yum Brands will be led by its current chief executive Greg Creed and Yum China will be led by Micky Pant, who was named the chief executive of the China business in August.
The plan to spin off Yum's China business comes days after activist investor Keith Meister, who has been pushing for a reorganisation at the company, was appointed to its board.
Meister's hedge fund Corvex Management owns nearly 5 per cent of the company.
The separation, which is expected to be completed by the end of next year, is intended to be tax free to shareholders. The China business is expected to have no significant debt.
Further details of the separation will be announced at the company's investor day on December 10, Yum Brands said.
The China business contributed 57 per cent to Yum's total revenue and 54 per cent to its operating profit in the third quarter.
The business had been hit by a food scandal at a meat supplier, hurting sales for four of the past five quarters.
Yum China has about 6,900 restaurants in more than 1,000 cities. The business remains on track to open about 700 new restaurants this year, Yum Brands said.
Goldman Sachs is the financial adviser to Yum Brands, while Wachtell, Lipton, Rosen & Katz and Mayer Brown are its legal advisers.


Yum Brands to spin off China business after activist investor named to the board

The plan to spin off Yum's China business comes days after activist investor Keith Meister, who has been pushing for a reorganisation at the company, was appointed to its board. Photo: Reuters

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