Yum to sell stake in China business to Primavera, Alibaba affiliate

BEIJING (REUTERS) - KFC and Pizza Hut owner Yum Brands Inc said Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding Ltd will buy a stake in Yum China for US$460 million (S$626.4 million) as part of a planned spinoff of the business.

Primavera will invest US$410 million and Ant Financial, which runs Alibaba's Alipay mobile payments platform, US$50 million, Yum Brands said on Friday.

The spinoff and completion of the Primavera and Ant Financial investments are expected on Oct. 31, with Yum China to begin trading on the New York Stock Exchange as an independent company on Nov. 1.

Primavera and Ant Financial will buy the shares at an 8 percent discount to the average price at which Yum China's shares trade between 31 days and 60 days after they are distributed to Yum shareholders.

Both companies will receive warrants to buy about 2 per cent stakes in Yum China twice at valuation thresholds of US$12 billion and US$15 billion, the company said. The warrants will have a five-year term.

The Wall Street Journal first reported the news on Friday.