The owner of the KFC, Taco Bell and Pizza Hut brands plans to hive off Yum China at the end of this month.
The company said the spin-off of its operations in China would increase franchise restaurant ownership to 93% from its current level of 77%, putting it most of the way towards its target of 98% by the end of 2018.
“As a ‘pure play’ franchisor, the transformed Yum! Brands will become more efficient and capital light with an optimized capital structure, improved cash flow and laser-like focus on our key strategies to drive same-store sales and new unit growth worldwide,” claimed Greg Creed, chief executive of Yum! Brands.
That improved cash flow should underpin a commitment to return up to US$13.5bn to shareholders through share repurchase programs and dividends by the end of 2019.
Trading in Yum China (NYSE:YUMC) is expected to start trading on the New York Stock Exchange on 1 November.
“Yum China is a powerhouse business that will be one of China’s largest publicly traded retail companies,” said Micky Pant, chief executive officer of Yum China.
“With our unique market position and a rapidly growing middle class and urban population, we believe that we offer an unrivalled opportunity for sustained long-term growth in China,” he added.
The spin-off will come shortly after Yum’s Chinese operations had a below-par quarter.
Like-for-like sales fell 1% year-on-year in the three months to 3 September, which the company said was partly due to protests against Western companies following international criticism over the People’s Republic’s territorial claims in the South China Sea.
Story by ProactiveInvestors