Yum Brands (YUM) is in talks with private equity company KKR (KKR) and others about a possible sale of a nearly 20% stake in its China business, the Wall Street Journal reported, citing people familiar with the matter.
The stake values the China business at about $10 billion, the report said.
Shares of the owner of the KFC and Pizza Hut chains were up 1.9% at $80.43 in early afternoon trading on Wednesday.
The company did not immediately respond to a request for comment.
The parties exploring offers include KKR, Baring Private Equity Asia and several Chinese funds, the Journal reported, adding that Yum appeared to be intent on selling a 19.9% stake to avoid a big tax bill.
The company, which also owns Taco Bell, plans to spin off Yum China by the end of 2016 and list it on the New York Stock Exchange, and possibly in Hong Kong.
Yum’s 6,900 restaurants in China account for about half of the company’s total sales.
The company is also seeking an “anchor investor” as a first step in the spinoff process, who among other things could add China know-how and make Yum China more attractive to other shareholders, the newspaper cited one of the people as saying.
Yum’s China business has been recovering after being hurt by food scandals and marketing missteps in 2014 and 2015.
Yum’s sales at established restaurants in China rose 2% in the fourth quarter, the second increase in 1-1/2 years. Yum China earned $1 billion before taxes, interest, depreciation and amortization (EBITDA) last year.
