Yum Brands to Spin Off China Business

At an investor’s conference in NY Tuesday, Yum Brands said it will spin off its China business at the end of the month.

Yum China 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 has no restaurants in China. It will also own the Little Sheep and East Dawning concepts.

Yum China has more than 7,300 restaurants and more than 400,000 employees in over 1,100 cities, and generated over $8 billion in system sales in 2015. The standalone company, Yum China, is expected to begin trading “regular way” on the New York Stock Exchange under the symbol “YUMC” on November 1, 2016.

The remaining Yum Brands will focus on driving growth at its Taco Bell, KFC and Pizza Hut brands around the world. Yum Brands, based in Louisville, KY, has more than 43,000 restaurants in almost 140 countries and territories.

Yum said it will increase franchise restaurant ownership from 77% currently to 93% at the time of the separation of the China business to at least 98% by fiscal year ending 2018.

The company said it will also reduce annual capital expenses by $500 million from 2015 to $100 million by fiscal 2019. General and administrative expenses will be cut by $300 million by fiscal 2019.

Yum Brands has also repurchased $5.5 billion in shares at an average price of approximately $81, reducing its share count by 16% as of October 10, 2016. The Company is also going to pay $13.5 billion back to shareholders (including dividends) between Q4 2015 and 2019.