Yum China Soars on Report Pizza Hut Operator Rejected Buyout

(Bloomberg) -- Yum China Holdings Inc., which operates Pizza Hut and KFC restaurants, has rejected a buyout offer from an investor group led by Hillhouse Capital Group, according to a person familiar with the matter.

The proposal to take over China’s biggest fast-food operator valued the company at $17 billion, or $46 a share in cash, according to the Wall Street Journal, which first reported the rejection. That would represent a 28 percent premium over Monday’s closing price, yet is still lower than an all-time high of $48.18 reached in January.

Yum China said in a statement it doesn’t comment on speculation.

Yum China’s board sees the company doing well as a publicly traded company and doesn’t think a private-equity consortium would add much value, according to another person familiar with the matter. The parties remain in contact, the person said.

Bloomberg reported earlier this month that Hillhouse, Baring Private Equity Asia, KKR and DCP Capital had formed a consortium with sovereign fund China Investment Corp. to back a potential takeover of the company. The consortium was said to be considering taking Yum China private with an eye to potentially relisting the business in Hong Kong at a later date.

Yum China Soars on Report Pizza Hut Operator Rejected Buyout

Yum China has been struggling to attract younger Chinese diners to restaurants in the face of increasing local competition and changing eating habits that favor healthier fare. The escalating trade war is also fueling speculation China could turn to consumer boycotts as part of its pushback against U.S. President Donald Trump’s tariffs. Yum was the target of anti-U.S. protests just two years ago.

Shares of Yum China jumped as much as 12 percent in New York trading Tuesday, before closing 3.6 percent higher at $37.17. The stock is down 7.1 percent this year, and in July touched the lowest level in 15 months.

Yum China was spun off from Louisville, Kentucky-based Yum! Brands Inc. in 2016. It operates China’s biggest network of fast-food restaurants, with about 8,200 outlets spread across more than 1,200 cities at the end of June, according to its latest results.

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