Yum Brands (NYSE:YUM), which owns the KFC, Taco Bell, and Pizza Hut restaurant chains, will spin off its once-fast growing China division sometime in 2016.
The company also announced on Thursday that the company is plan to pay back the investors up to $6.2 billion dollars before spin of its Chinese business and listed it as an individual company on the New York Stock Exchange by the end of 2016.
Yum’s China branch generated 54% of overall operating profit of the company in the third quarter, and China has been the biggest source of growth by far for Yum since 1997. But in the last few years, KFC in China has been trapped in food safety scandals, avian flu outbreak fears and marketing missteps. All of these factors raise doubts on the business: Yum’s sales have been decreased in China for four of the last five quarters. The disappointment in China has been an incentive to Yum’s decision to spinning off its China business.
However, the CEO of the Yum’s show confidence about Yum’s international market. He sees the opportunity to eventually triple the number of restaurants Yum has, pointing to markets like Africa and Latin American as being full of potential. KFC can open 500 more stores outside of the U.S. and China, while Pizza Hut can grow by 325 locations. What’s more, Africa shows “huge” potential, he said, particularly Nigeria. Even without China, Yum will be in 126 countries.
Yum’s share price went down 2.6% to$71.3 per share Friday morning.