Hillhouse Capital and KKR & Co are among firms exploring a potential acquisition of Yum China Holdings Inc (百勝中國控股), the US$14 billion US-listed operator of KFC and Pizza Hut brands in China, people familiar with the matter said.
The private equity firms are talking to banks about financing for a possible deal, said the people, who asked not to be identified because details are private.
Potential suitors could seek to form a consortium to jointly bid for the business, the people said.
Yum China shares rose 11 percent in US trading on Thursday, the most since its 2016 listing, after The Information reported Hillhouse’s interest, citing unidentified people.
Yum Brands Inc spun out the Chinese business less than two years ago after losing market share amid changing tastes and increased local competition in the world’s most populous country.
The Shanghai-based firm has struggled to attract younger diners to its Pizza Hut restaurants, despite overhauling its mobile app, upgrading its menu and enlisting celebrities to tout the US brand.
Deliberations about any potential bids are at an early stage, and they may not result in a deal, the people said. Representatives for Hillhouse and KKR declined to comment.
An external representative for Yum China said in an e-mail that the company does not comment on rumors or market speculation “regarding these sorts of matters.”
McDonald’s Corp agreed to sell a controlling stake in its China and Hong Kong operations last year for about US$1.7 billion. Chinese state-backed conglomerate Citic Ltd (中信股份), Citic Capital Holdings Ltd (中信資本控股) and US private-equity firm Carlyle Group LP bought an 80 percent holding that valued the business at as much as US$2.08 billion.
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