Yum! Brands has agreed to sell Pizza Hut to Connecticut private equity firm LongRange Capital for about $1.5 billion, with an earn-out option of $75 million by 2030.
In a news release Tuesday, Yum! Brands also said Pizza Hut in mainland China will be acquired by Yum China Holdings for about $1.2 billion. Upon close, which is expected in the third quarter, the Pizza Hut locations in China will no longer be subject to the license fees previously payable to Yum! Brands.
Sidley Austin represented Yum China Holdings with a Chicago-based team that included Lauren Grau in Dallas. Paul Choi, Scott Williams and Mark Kaufmann advised from Chicago.
Savannah Franklin is Pizza Hut’s chief legal officer and chief strategic partnerships officer. Weil, Gotshal & Manges and Mayer Brown are outside legal advisers to Yum! Brands.
Yum! Brands began exploring the sale of Pizza Hut in November. In the news release, the company said the transactions announced Tuesday provide “the strongest path to maximize shareholder value while providing Pizza Hut an ownership structure tailored to its distinct markets, competitive strengths and long-term priorities under leadership with significant relevant [quick-service restaurant] experience.”
“Becoming the brand owner will give the company greater strategic flexibility to drive innovation across the menu, store formats, new modules, and operations,” said Joey Wat, CEO of Yum China. “The elimination of the license fee payments to Yum! Brands are expected to enhance store economics and lower store-opening thresholds, which support Pizza Hut’s margin expansion, growth acceleration and market leadership in China.”
Yum China Holdings said there are 4,375 Pizza Hut restaurants in more than 1,100 cities in China. The company plans to expand to more than 6,000 restaurants by 2028. Yum China and Yum! Brands will continue its current partnership to expand the KFC brand in China to over 17,000 restaurants by 2028. There are currently about 14,500 KFC restaurants in the country. The companies also plan to increase the number of Taco Bell restaurants in China from the current number of 30 locations.
Yum! Brands is based in Louisville, Kentucky, though Plano has served as Pizza Hut’s headquarters since 2010. Yum! Brands also announced a $4 billion stock repurchase plan in conjunction with the deals to shed Pizza Hut. The company operates or franchises more than 63,000 restaurants in 155 countries.