Yum China soars on report of rejected buyout

By BLOOMBERG

NEW YORK • Yum China Holdings Inc, which operates Pizza Hut and KFC restaurants, has rejected a buyout offer from an investor group led by Hillhouse Capital Group, according to a person familiar with the matter.

The proposal to take over China’s biggest fast-food operator valued the company at US$17 billion (RM69.88 billion), or US$46 a share in cash, according to the Wall Street Journal, which first reported the rejection. That would represent a 28% premium over Monday’s closing price, yet is still lower than an all-time high of US$48.18 reached in January.

Yum China said in a statement it doesn’t comment on speculation.

Yum China’s board sees the company doing well as a publicly traded company and doesn’t think a private-equity consortium would add much value, according to another person familiar with the matter. The parties remain in contact, the person said.

Bloomberg reported earlier this month that Hillhouse, Baring Private Equity Asia, KKR & Co Inc and DCP Capital had formed a consortium with sovereign fund China Investment Corp to back a potential takeover of the company. The consortium was said to be considering taking Yum China private with an eye to potentially relisting the business in Hong Kong at a later date.

Shares of Yum China jumped as much as 12% in New York trading on Tuesday, before closing 3.6% higher at US$37.17. The stock is down 7.1% this year.