Fast-food chain operator Yum China says no deal on a $17 billion buyout offer from an investment consortium headed by Hong Kong-based investment firm Hillhouse Capital Group, a person with knowledge on the issue said.
According to reports, Hillhouse offered to shell out USD$46 per share or more than USD$17 billion in total for the Shanghai-based, US-listed food chain company.
Other than Hillhouse, the investment group that made the offer to buy stakes in Yum China also included other firms such as KKR, Baring Private Equity Asia, and the state-held fund China Investment Corp., a report from CNBC said.
Yum China is an offshoot of the international food company Yum Brands and holds an exclusive license to operate popular food chain establishments such as Pizza Hut, Taco Bell, and KFC in China. The company now has over 8,100 restaurants operating throughout the 1,200 cities in the country.
According to Reuters, Yum China's board of directors opted not to pursue the buyout offer although the resource person failed to specify the reasons behind the rejection.
Fred Hu, one of the members of the board, is the chairman of Primavera Capital - an investment company which, along with Ant Financial Services Group, recently bought a minority stake in Yum China for USD$460 million in 2016.
Market Value Upsurge
This recent corporate development somehow affected, in a good way, Yum China's market standing. As stipulated, the firm's shares increased as much as 11 percent before it finally mellowed down around 4 percent at $37.17 in Tuesday's market closing.
Prior to this week's rise, Yum China's shares took a plunge down at 10 percent in total for this year, following its increase by more than 50 percent in 2017.
As reported earlier by the Wall Street Journal, there were already rumors making rounds about the buyout interest of Hillhouse and its corporate cohorts.
Hillhouse's operating chief Sam Su happens to have served as a former chairperson and CEO of Yum China. He was among the key individuals held responsible for the company's expansion in China and its eventual split from the mother firm.
In 2016, Yum China spun off from Yum! Brands - the company that holds the global operation of the aforementioned fast food restaurants, excluding in China.
Hillhouse, meanwhile, is headed by its founder Zhang Lei. Zhang was among those who first made an investment in the social media and gaming giant, Tencent, and in the e-commerce group, JD.com.
