INTERNATIONAL | Staff Reporter, Australia

Yum! Brands Board of Directors greenlights the separation of Yum China

The process is set to end on October 31, 2016.

Yum! Brands, Inc. announced that its Board of Directors has approved the previously announced separation of its China business, now owned by Yum China Holdings, Inc. (Yum China) from the company. Yum China will be operating as an independent company starting November 1.

Yum! Brands also announced an increase in the Company’s dividend.

“We are moving full steam ahead with the separation of Yum China, establishing two powerful, independent and focused growth companies dedicated to building on our brand strengths and unlocking the full value of each business for our shareholders,” said Greg Creed, Chief Executive Officer of Yum! Brands.

“As one of the world’s largest restaurant companies, Yum! Brands will continue to focus on expanding the presence and performance of KFC, Pizza Hut and Taco Bell as a primarily-franchised business to deliver enhanced value to shareholders.”

“This is an exciting time for Yum China as we approach our launch as a new, independent public company,” said Micky Pant, Chief Executive Officer of Yum China.

“Yum China has a leading position in the Chinese market, and we see tremendous opportunities to leverage our well-recognized brands and decades of experience to drive growth. We are all energized to achieve Yum China’s full potential and create sustained value for shareholders.”

Returning Capital to Shareholders

The Yum! Brands Board also declared an increased dividend of $0.51 per share, payable on November 4, 2016, to shareholders of record as of the close of business on October 19, 2016. This dividend represents an 11% increase from the Company’s previous quarterly dividend of $0.46 per share. Since initiating a dividend in 2004, Yum! Brands is one of a select group of S&P 500 companies to annually increase its dividend at a double-digit percentage rate.

Since Yum! Brands announced its intention to separate Yum China, the Company has repurchased approximately $5.1 billion in shares at an average price of approximately $80, reducing its share count by approximately 15% as of September 23, 2016. Yum! Brands expects to repurchase an additional $1.1 billion in shares before the end of 2016 to achieve its previously announced plan to return $6.2 billion of capital to shareholders (excluding dividends) in connection with the separation of its China business.

The Yum! Brands Board has approved a distribution of one share of Yum China common stock for each share of Yum! Brands common stock held at the close of business on October 19, 2016, the record date for the distribution. No fractional shares of Yum China common stock will be issued. Instead, the distribution agent will aggregate fractional shares of Yum China common stock and sell the whole shares in the open market. The aggregate net cash proceeds of the sales will be ratably distributed to those shareholders who would otherwise have received fractional shares of Yum China common stock.

Yum! Brands shareholders are not required to take any action to receive the shares of Yum China common stock in the distribution, and they will not be required to surrender or exchange their Yum! Brands shares. Importantly, the number of Yum! Brands shares owned by each shareholder will not change as a result of the distribution.

Yum! Brands intends for the distribution of Yum China common stock to be tax-free for its shareholders, except with respect to any cash received in lieu of fractional shares, and expects to complete the distribution after the close of business on October 31, 2016. The separation and distribution remain subject to the satisfaction or waiver of certain conditions and remains subject to the sole discretion of the Yum! Brands Board.

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