Yum Brands Is Selling a Stake in Its China Business for $460 Million

September 2, 2016, 11:28 AM UTC
A KFC restaurant in a shopping mall.  KFC, McDonalds,
BEIJING, CHINA - 2014/07/22: A KFC restaurant in a shopping mall. KFC, McDonalds, Pizza Hut and other Western brands are suffering a food safety crises in the Chinese market. On July 20, 2014, Shanghai Fuxi food Ltd. the meat supplier for well-known international fast food chains such as McDonalds and Yum Group, was exposed for using expired and bad chicken and beef. (Photo by Zhang Peng/LightRocket via Getty Images)
Photograph by Zhang Peng LightRocket — Getty Images

KFC and Pizza Hut owner Yum Brands (YUM) said Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding (BABA) will buy a stake in Yum China for $460 million as part of a planned spinoff of the business.

Primavera will invest $410 million and Ant Financial, which runs Alibaba’s Alipay mobile payments platform, $50 million, Yum Brands said on Friday.

The spinoff and completion of the Primavera and Ant Financial investments are expected on Oct. 31, with Yum China to begin trading on the New York Stock Exchange as an independent company on Nov. 1.


Primavera and Ant Financial will buy the shares at an 8% discount to the average price at which Yum China’s shares trade between 31 days and 60 days after they are distributed to Yum shareholders.

Both companies will receive warrants to buy about 2% stakes in Yum China twice at valuation thresholds of $12 billion and $15 billion, the company said. The warrants will have a five-year term.

The Wall Street Journal first reported the news on Friday.

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