Yum! Brands bowed to activist-investor pressure and agreed to separate its China business from its US operations, the biggest shake-up at the company since it was spun off from PepsiCo almost two decades ago.
Yum! China will become a franchisee of Yum in the Asian country, with exclusive rights to KFC, Pizza Hut and Taco Bell, according to a statement Tuesday.
The move follows calls from hedge fund manager Keith Meister, a protege of billionaire Carl Icahn, who has said Yum’s Asian market could be better served with a more focused business and that the move could boost Yum’s value by $7 billion. The fast-food giant added Meister, who owns about five per cent of its shares, to the board on 16 October.
Sales in China for the Louisville, Kentucky-based owner of KFC and Pizza Hut have been hurt byfood safety scandals and increasing competition from local fast-food chains. Meister, founder of hedge fund Corvex Management, said at an investor conference in May that the risks and opportunities for Yum in China are different than in the US, in part because most of its Chinese restaurants are company-owned and not franchised.
News by Bloomberg, edited by Hospitality Ireland
