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Yum! Brands okays separation, increases dividend and appoints board member

Lots of high-level action occurring this week at Yum Brands with its board of directors giving the go-ahead to the previously announced separation of the company from its China business. Yum China begins trading Nov. 1, on the New York Stock Exchange as YUMC.

September 28, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

There is lots of high-level action occurring this week at Yum Brands with its board of directors giving the go-ahead to the previously announced separation of the company from its China business at the close of business Oct. 31, according to a news release. With that separation, Yum China begins trading Nov. 1, on the New York Stock Exchange as YUMC with "when-issued" trading for both companies starting Oct. 17, on the exchange.

Yum Brands also announced an increase in its dividend as well as an addition to its board. The increased dividend of 51 cents a share is payable on Nov. 4, to shareholders of record as of Oct. 19, according to a news release. That’s an 11 percent increase over the previous quarterly dividend of 46 cents a share.  

"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 Yum! Brands CEO Greg Creed, in the news release. "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."

Since announcement of the separation of the China business, Yum has repurchased about $5.1 billion in shares at an average price of $80, reducing its share count by roughly 15 percent. The company expects to repurchase $1.1 billion in additional shares before the end of the year to attain its plan to return $6.2 billion of capital to shareholders, excluding dividends, in conjunction with the separation of the two companies, according to the release.

Yum China Holdings, Inc. will be a licensee of Yum! Brands in Mainland China with exclusive rights there to the country’s leading quick-service restaurant chain, KFC, as well as its leading casual dining chain, Pizza Hut, and Taco Bell, which is not yet represented in China, according to a news release. It will also own the Little Sheep and East Dawning concepts outright.

Currently, Yum China has more than 7,200 restaurants in more than 1,100 cities there. Collectively, those locations generated more than $8 billion in system sales in 2015. The brand’s growth is fueled by younger consumers who want digitally sophisticated, brand-driven restaurants, as well as a growing middle class and urban population in China. Together these factors are helping to create what is soon expected to be the world’s largest market for restaurant chains.

Back home, a new board member

Yum! Brands, Inc. itself also said this week it has named Paget Alves to its 12-member board of directors, of whom 11 will now be independent.

Alves, 62, also serves on the International Game Technology PLC board, as well as that for Ariel Investments LLC and Synchrony Financial. He is previously a board member of GTECH Holdings Corporation and Herman Miller, Inc. and was chief sales officer at Sprint Corporation, until late 2013. He was also CEO at PointOne Telecommunications Inc., and president and COO at Centennial Communications.

 "We are excited to appoint a director as qualified and talented as Paget who will bring fresh perspectives to the board as Yum! Brands begins its next chapter and moves forward following the separation of the China business," said Creed. "I look forward to working with him as we execute on our strategic plans to drive growth across all of our brands and deliver value for our shareholders."

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.