Yum Brands to Buy Little Sheep

May 15, 2011

The parent company of fast food giants like KFC, Taco Bell and Pizza Hut, Yum Brands, plans to add a Chinese chain to its global food empire. Little Sheep, which allows customers to dip products inot boiling broths, is one of the fastest growing restaurant chains in mainland China and has pioneered the "hot pot" concept. Last year alone, the company opened 500 new restaurants in China. 

Yum already owns 27.2 percent of the company and offered $.84 per share for most of the outstanding shares. A recent valuation estimated Little Sheep's worth at around $682 million. 

Historically, Yum was one of the first western companies to open franchises in China. The move has paid off. Since the first KFC opened in China in 1987, 3,200 additional stores have opened across 700 Chinese cities. Pizza Hut was introduced in 1990 and boasts well over 600 stores and deliever outlets across the country. Those numbers place Yum far ahead of rivals like McDonalds in the world's fastest growing economy. 

"We have seen from Little Sheep's previous explorations that there is a demand for the hot pot concept in overseas markets and that there is the potential for further development internationally. In long term, with its global business network and successful brand building experience, Yum! will work with Little Sheep to explore effective ways of introducing the hot pot concept and the Little Sheep brand to a wider global audience," Sam Su, Chairman and CEO of Yum!'s China Division said in a statement announcing the proposed privatization. 

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