Services

Yum Brands Will Split Off China Business

Fried Chicken
Thinkstock
The owner of KFC, Pizza Hut and Taco Bell announced Tuesday morning that the company intends to hive off its China business into a separate company by the end of next year. Yum! Brands Inc. (NYSE: YUM) will spin off its Yum! China operations into a separately traded public company that will have exclusive rights to Yum’s three top franchises.

Yum is targeting 95% franchisee-owned and operated stores by the end of 2017. The company currently claims a base of more than 41,000 stores and plans to open 2,000 more in 2016. The company is giving something up too:

Yum! Brands is committed to returning substantial capital to shareholders in conjunction with the separation. This will occur as the Company transitions to a non-investment grade credit rating with a balance sheet more consistent with highly leveraged peer restaurant franchise companies. Moreover, this will allow for an ongoing return of capital framework that will seek to optimize the Company’s long-term growth rate on a per-share basis.

The separation follows a push for Yum’s reorganization by activist investment firm Corvex Management, which owns almost 5% of the company. Corvex’s Keith Meister was appointed to Yum’s board of directors last week.

Yum’s China business has never fully recovered from a tainted food scandal in late 2012 and successive issues related to the Chinese operations. Apparently letting the China business sort itself out while putting the rest of the company on a high-growth path isolates the problems and is expected to give Yum a lift.

That is certainly the way investors are looking at Tuesday. Shares traded up more than 3% at an intra-day high of $75.22 after closing at $71.71 on Monday. The stock’s 52-week range is $66.35 to $95.90, and the consensus price target is $81.47.

ALSO READ: 9 Great Companies That Can Raise Dividends for a Decade

100 Million Americans Are Missing This Crucial Retirement Tool

The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.

Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.

A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.

Click here to learn how to get a quote in just a few minutes.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.