Founder of Primavera Dr. Fred Hu to Become
Yum China’s Non-Executive Chairman
Spinoff on Track to Be Completed October 31,
2016
Yum China to be Traded on NYSE Under Ticker
“YUMC”
Yum! Brands, Inc. (NYSE: YUM) today announced that it has
entered into agreements with Primavera Capital Group, a China-based
global private equity firm, and Ant Financial Services Group, one
of the world’s leading online and mobile financial services
providers that operates the widely used Alipay mobile payments
platform, to invest a total of $460 million in Yum China,
concurrent with the completion of Yum China’s spinoff from Yum!
Brands.
The spinoff and concurrent completion of the Primavera and Ant
Financial investments are expected to occur on October 31, 2016,
with Yum China to commence trading on the New York Stock Exchange
as an independent company on November 1, 2016, under the ticker
symbol “YUMC.”
Under the terms of the agreements, Primavera and Ant Financial
will invest $410 million and $50 million, respectively, in Yum
China. The final number of shares issued to Primavera and Ant
Financial will be subject to a post closing adjustment such that
the effective price will be equal to an 8% discount to the
volume-weighted average trading price of Yum China’s equity value
during the period commencing 31 days and ending 60 days following
completion of the spinoff (subject to a collar mechanism limiting
the minimum and maximum shares to be issued). Primavera and Ant
Financial will also receive two tranches of warrants to acquire
shares of Yum China common stock reflecting approximately 2% equity
ownership interest (in the aggregate) in each tranche to be
exercisable in the five-year period following the issuance of those
warrants, with strike prices correlating to equity values of $12
billion and $15 billion.
The Company also announced that founder of Primavera Dr. Fred
Hu, former Chairman of Greater China at Goldman Sachs, will become
Non-Executive Chairman of the Board of Yum China.
“We have long admired the Yum China business and are looking
forward to collaborating with the Board and management to realize
the company’s full potential,” said Dr. Hu of Primavera. “Yum China
is an established leader in the retail and restaurant industry
which we believe is poised for continued strong growth and unit
expansion as cities across China invest in new transportation hubs,
shopping malls and other physical and electronic infrastructure
that will support consumption. I look forward to leading the Board
of Directors of Yum China in its new and exciting chapter as an
independent company.”
“Through this collaboration, we aim to help Yum China provide
world-class mobile payment services for tens of millions of
customers across its brands. These services include hassle-free
Alipay for customers to help shorten queues at the cashier as well
as membership solutions for Yum China designed to help manage their
customer relations and promotions,” said Eric Jing, President of
Ant Financial Services Group. “Leveraging our Big Data
capabilities, KFC and Pizza Hut witnessed promising marketing
results through their promotion on multiple Ant Financial
platforms. We look forward to further collaborating with Yum China
in the future.”
“Primavera and Ant Financial both have deep insights into the
rapid urbanization and digital transformation which is driving the
evolution of China’s economy, and we are excited about their
investment into Yum China,” said Micky Pant, Chief Executive
Officer of Yum China. “The investment is a clear endorsement of our
business strategy and growth potential, and their diverse
experience and relationships will be extremely beneficial. Dr. Hu’s
extensive market insights and experience scaling businesses in
China will be invaluable as we move to expand the footprint of our
brands. In addition, Yum China is already the leading restaurant
company for cashless payment systems in China, and we expect Ant
Financial can provide further unique insights to help us better
connect with consumers through mobile technology.”
“The investments from Primavera and Ant Financial in Yum China
mark another important milestone in our plans to separate the China
business and create a solid foundation for Yum China as it prepares
to become an independent restaurant powerhouse,” said Greg Creed,
Chief Executive Officer of Yum! Brands. “We look forward to
partnering with Primavera and Ant Financial to drive long-term
growth at Yum China and welcome Dr. Hu as Non-Executive Chairman of
Yum China. I’m pleased that the spinoff remains on track for
completion on October 31 and look forward to sharing additional
details on the transformative initiatives we are undertaking as we
become a more heavily franchised company at our New York investor
conference on Tuesday, October 11.”
Primavera has an established track record of supporting
successful, high-growth companies in China whose business models
benefit from rising consumption and the adoption of urban
lifestyles. Its investments include Alibaba Group Holding Ltd.
(NYSE: BABA) and Ant Financial, among many others. Ant Financial is
an online and mobile financial services firm and digital payments
network provider in China.
The closing of the investments are subject to completion of the
spinoff and other customary closing conditions.
Goldman, Sachs & Co. is serving as financial advisor and
Wachtell, Lipton, Rosen & Katz is serving as legal advisor to
Yum! Brands and Yum China. PJT Partners is serving as an
independent financial advisor to Yum! Brands’ Board of Directors.
Simpson Thacher & Bartlett LLP and Fangda Partners are serving
as legal advisors to Primavera and Ant Financial.
About Yum China Holdings
Yum China Holdings will become a licensee of Yum! Brands in
Mainland China. It will have exclusive rights to KFC, China’s
leading quick-service restaurant concept, Pizza Hut, the leading
casual dining brand, and Taco Bell, which is expanding globally but
is not yet in China. The new company will be well positioned for
growth thanks to its strong financial position, established brand
identity, extensive and expanding footprint and operational
expertise. It will have a strong capital position, no debt and
significant sales and profit potential from its existing
restaurants. KFC and Pizza Hut have more than 7,200 restaurants in
over 1,000 cities in China and generated over $8 billion in system
sales and approximately $1 billion in EBITDA in 2015. The growth of
consumption in China is being fueled by a new generation of younger
consumers who are digitally sophisticated and brand driven. The
additional growth of the urban population in China is expected to
create the world’s largest market for restaurant brands, with Yum
China as the clear leader.
About Yum! Brands
Yum! Brands, Inc., based in Louisville, Kentucky, has nearly
43,000 restaurants in almost 140 countries and territories. Yum! is
ranked #218 on the Fortune 500 List with revenues of over $13
billion in 2015 and is one of the Aon Hewitt Top Companies for
Leaders in North America. The Company’s restaurant brands - KFC,
Pizza Hut and Taco Bell - are the global leaders of the chicken,
pizza and Mexican-style food categories. Worldwide, the Yum! Brands
system opens over six new restaurants per day on average, making it
a leader in global retail development.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this communication contain
“forward-looking statements.” Forward-looking statements can be
identified by the fact that they do not relate strictly to
historical or current facts. These statements often include words
such as “may,” “will,” “estimate,” “intend,” “seek,” “expect,”
“project,” “anticipate,” “believe,” “plan,” “could,” “target,”
“predict,” “likely,” “should,” “forecast,” “outlook,” “model,”
“ongoing” or other similar terminology. Forward-looking statements
are based on our current expectations, estimates, assumptions or
projections concerning future results or events, including, without
limitation, the planned Separation of the Yum and Yum China
businesses, the timing of any such Separation, the Investment, the
closing of the Investment, or the future earnings and performance
as well as capital structure of Yum or any of its businesses,
including the Yum and Yum China businesses on a standalone basis if
the Separation is completed. Forward-looking statements are neither
predictions nor guarantees of future events, circumstances or
performance and are inherently subject to known and unknown risks,
uncertainties and assumptions that could cause our actual results
to differ materially from those indicated by those statements. We
cannot assure you that any of our expectations, estimates or
projections will be achieved. Factors that could cause actual
results and events to differ materially from our expectations and
forward-looking statements are included in reports filed with the
SEC by Yum from time to time, including those discussed under the
heading “Risk Factors” in our most recently filed reports on Form
10-K and 10-Q. You should not place undue reliance on
forward-looking statements, which speak only as of the date hereof.
We are not undertaking to update any of these statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20160902005248/en/
Yum! Brands, Inc.Investor Relations:Keith Siegner,
888-298-6986Vice President, Investor Relations and Corporate
StrategyorElizabeth Grenfell, 888-298-6986Director Investor
RelationsorMedia Relations:Virginia Ferguson, 502-874-8200Director
Public RelationsorKekstRuth Pachman, 212-521-4891orRoss Lovern,
212-521-4876
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