Tag: Greg Creed

Yum agrees to sell $464M stake in China unit ahead of spinoff; Haier to brand cooktops and ovens in U.K.; plus more (possibly) bad news about the (allegedly) leaked KFC recipe

A news summary focused on 10 big employers; updated 8:41 a.m.

YUM has agreed to an advance sale of a $464 million slice of its China operations to a prominent Chinese deal maker and the financial affiliate of Chinese Internet giant Alibaba. The deal announced this morning is with Primavera Capital and Ant Financial Services Group. They will buy the shares at an 8% discount to the average price at which Yum China’s shares trade between 31 and 60 days after they’re distributed to Yum shareholders in a spinoff expected by Oct. 31. Yum China will start trading on the New York Stock Exchange as an independent company on Nov. 1 under the ticker symbol “YUMC.”

Greg Creed
Creed

Louisville-based Yum also announced Primavera founder Dr. Fred Hu, former chairman of Greater China at Goldman Sachs, will become Yum China’s non-executive board chairman. In a statement, Yum CEO Greg Creed said: “The investments from Primavera and Ant Financial in Yum China mark another important milestone in our plans to separate the China business and create a solid foundation for Yum China” (Wall Street Journal and press release).

GE APPLIANCES owner Haier is filling a hole in its product lineup: It will begin to sell Haier-branded gas cooktops, induction cooktops and ovens in the U.K., beginning next year. China-based Haier hasn’t yet released prices or dates when they might appear in other countries, however. Haier bought Louisville-based GE Appliances for $5.6 billion in June, in a bid to gain a stronger presence in the U.S., where it has only 1.1% of the appliance market. The Louisville company employs 6,000 workers at Appliance Park in the south end (CNET).

KFC: YouTube vlogger Hellthy Junk Food has done a blind taste taste of real KFC fried chicken vs. that purportedly leaked super-secret recipe of 11 herbs and spaces founder Harlan Sanders created. Posted Tuesday, the video’d results have already drawn 75,000 views — and they don’t bode well for the chain:

BROWN-FORMAN: Financial news site Seeking Alpha  Continue reading “Yum agrees to sell $464M stake in China unit ahead of spinoff; Haier to brand cooktops and ovens in U.K.; plus more (possibly) bad news about the (allegedly) leaked KFC recipe”

Pizza Hut adding 300-plus restaurants in Central Europe; Yum stock hits 52-week high; and White House in big new Obamacare push as Humana and Aetna flee exchanges

A news summary focused on 10 big employers; updated 6:11 p.m.

Pizza Hut restaurant building
Pizza Hut has more than 14,000 locations worldwide.

PIZZA HUT said it signed a master franchise agreement with AmRest Holdings that gives the Polish company the right to own, develop and sub-franchise more than 300 restaurants in Poland, Czech Republic, Hungary, Bulgaria, Serbia, Croatia, Slovakia, and Slovenia over the next five years; AmRest already operates 80 Huts (press release).

Wall Street rallied around the news: YUM shares closed this afternoon at $90.76, after trading earlier at a 52-week high of $90.88.

Greg CreedThe expansion comes as Yum CEO Greg Creed is on the offensive against rival Domino’s on the domestic front, especially in technology such as ordering apps that attracts younger consumers. Pizza Hut, headquartered in Plano outside Dallas, is the world’s biggest pizza chain, more than 14,00 restaurants in more than 100 countries. No. 2 Domino’s has more than 12,500 locations in over 80 markets around the world.

AmRest was launched in 1993 with its first Pizza Hut in Poland’s Wrocław and says it’s now the biggest independent chain restaurant operator in Central and Eastern Europe. It operates more than 1,000 eateries in 13 countries through a portfolio of brands that also includes KFC, Burger King, Starbucks, La Tagliatella, Blue Frog and Kabb.

HUMANA: Facing withdrawals from insurance exchanges by Humana, Aetna and others amid surging premiums, the Obama Administration is preparing a major push to enroll new participants in public online marketplaces under the Affordable Care Act. The administration is considering an ad campaign with testimonials from newly insured consumers, as well as direct appeals to young people hit by tax penalties for failing to enroll (New York Times).

Humana and Aetna logos 250On Monday, Aetna blamed anticipated losses for the Hartford insurer’s decision to exit nearly 70% of the exchange markets it’s been serving; that pullout will come next year. The followed a similar announcement earlier this month from Humana, which said Continue reading “Pizza Hut adding 300-plus restaurants in Central Europe; Yum stock hits 52-week high; and White House in big new Obamacare push as Humana and Aetna flee exchanges”

Documents reveal the enormous cost of spinning off Yum’s China Division

KFC Shanghai
A KFC in Shanghai, where Yums’s China Division is based.

Last fall, Yum announced plans to turn the huge China Division into a standalone company, a mammoth undertaking the Louisville fast-food giant plans to complete by Oct. 31 — despite recent reports of stalled talks with two big investors.

Expenses for investment banking, legal, and other spin-related services are enormous, according to Securities and Exchange Commission documents. Yum disclosed initial expenses of $9 million in the annual report last February. They’ve mushroomed ever since, according to the most recent quarterly report:

$10 million

spent in the second quarter alone

$28 million

since the spinoff was announced in October

$58 million

projected total cost by Oct. 31

What’s at stake?
Greg Creed
Creed

Much of Yum’s future. Based in Shanghai, the China Division has 7,200 restaurants, mostly company-owned KFCs and Pizza Huts. Last year, they accounted for 61% of Yum’s $11.1 billion in revenue and 39% of $1.9 billion in profits. Overall, Yum has 43,000 restaurants. (About Yum.)

Yum CEO Greg Creed and the board of directors agreed in October to separate the China business under pressure from activist investors, including Corvex Management Founder Keith Meister, who gained a seat on the board as part of the deal. They think the sum of the parts is greater than the whole.

Yum’s risky China bet

The company has regularly warned investors about Continue reading “Documents reveal the enormous cost of spinning off Yum’s China Division”

Yum China buyout said stalled as two bidders balk at terms; U.S. farmers binge on rye as Brown-Forman whiskey demand soars; CJ owner Gannett’s stock tanks 9% on weak Q2 results

A news summary focused on 10 big employers; updated 4:03 p.m.

KFC Shanghai
A KFC in Shanghai, where the Yum China division is headquartered.

YUM: Two of what may be the only serious bidders for Yum’s mammoth China Division have submitted offers — including one for just $2 billion — but have failed to reach a final agreement for a business once expected to command $10 billion, according to The Financial Times. The bidders are China-based private equity fund Primavera and Singapore sovereign wealth fund Temasek.

Primavera made the $2 billion offer for part of the franchise, people briefed on the talks said. “The bid conformed to Yum’s original conditions for the sale, but the buyout group and Yum could not agree on pricing,” the FT says.

Greg Creed
Creed

Temasek also made an offer — the newspaper didn’t say how much — but also couldn’t reach an agreement on the 7,200 KFC and Pizza Hut units. They accounted for more than half Yum’s revenue last year.

The Louisville-based fast food giant put the China operations on the auction block last year after being pressured to do so by investors including Corvex Management founder Keith Meister. CEO Greg Creed is preparing to lead a road show that Yum expects will end with a spinoff by Oct. 31.

Keith Meister
Meister

But the FT’s report raises doubts about the timetable, particularly after Bloomberg News reported that a consortium of the only other known bidders dropped out in May: private equity firm KKR and Chinese state investor CIC.

A company spokesperson whom the FT didn’t identify said Yum is “making great progress toward the separation of our China business,” which last year accounted for 61% of Yum’s $11.1 billion in revenue and 39% of $1.9 billion in profits.

The FT’s report was published yesterday. This afternoon, Wall Street wasn’t worried; Yum’s stock closed less than 1% higher, or 47 cents, to $89.72 — just below its record trading high of $90.38 on Monday (FT).

BROWN-FORMAN: Racing to meet consumer demand for whiskey, U.S. farmers planted 1.76 million acres of rye for the 2016-17 season, the most since 1989 and a 12% increase from a year ago. Planted in autumn and harvested in mid-summer, rye fell out of favor over the past decade as other crops produced bigger profits (Reuters).

In Nashville yesterday, Jack Daniel’s officially opened its second retail store — the first in its 150-year history outside the distiller’s corporate hometown of Lynchburg. “We get about 275,000 visitors that come see us every year, and there’s certainly a lot more people in this world, and we’d like to take Lynchburg to them,” said Dave Stang, director of events and sponsorships. The store doesn’t sell its namesake liquor :(, but does sell Jack Daniel’s-branded merchandise (News Channel 5).

Meanwhile, the Jack Daniel’s Barrel Hunt promotion is coming to South Africa as part of the distiller’s 150th anniversary — a global scavenger hunt to find 150 handcrafted barrels at historic and cultural sites (Biz Community). Clues for the next barrel, in Lithuania’s Kaunas, will be revealed tomorrow. The most recent found was in the U.K.’s Manchester; still to be found: barrels in Prague and Riccione, Italy. How the hunt works.

Garvin Brown IV
Garvin Brown

And Brown-Forman stockholders hold their annual meeting tomorrow at 9:30 a.m. in the company’s Louisville headquarters conference center at 850 Dixie Highway. Board Chairman Garvin Brown IV will oversee the meeting. On the agenda, according to the proxy statement:

  • Electing 12 directors to the board. They include three new members initially elected this spring, all fifth-generation members of the Brown family controlling the company. They are Campbell P. Brown, Marshall B. Farrer, and Laura L. Frazier.
  • Voting on a proposal to amend the Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock in connection with the company’s previously announced two-for-one stock split.

GE/HAIER: In Everett, Wash., a Daily Herald reader takes issue Continue reading “Yum China buyout said stalled as two bidders balk at terms; U.S. farmers binge on rye as Brown-Forman whiskey demand soars; CJ owner Gannett’s stock tanks 9% on weak Q2 results”

Greg Creed
Creed

“I think George Hamilton, as the new Colonel behind Extra Crispy is brilliant and that is having a positive impact on our sales momentum at KFC in the U.S.”

— Yum CEO Greg Creed, in a second-quarter earnings teleconference with Wall Street analysts last week. The perpetually tanned Hamilton debuted a month ago as the latest in a series of KFC Founder Harland Sanders impersonators. Here’s one of the spots:

Top U.S. health official: competition key to insurance markets in Humana-Aetna deal; British Pizza Huts are 😋 about their 🆕 menus; and Amazon adds 10th Calif. center

A news summary focused on 10 big employers; updated 5:23 p.m.

Pizza Hut emoji menu
An emoji expert wrote the new menus.

HUMANA: The Obama administration’s top health official highlighted the importance of competition to insurance markets, as the Justice Department is poised to decide on two massive deals among four of the health-plan industry’s biggest players: Humana-Aetna’s $37 billion tie-up, and Anthem-Cigna’s $48 billion. But Health and Human Services Secretary Sylvia Mathews Burwell declined to comment on her department’s view of the two massive deals. “When there is competition, that creates downward price pressure, and it also creates upward quality pressure,” Burwell said in a brief interview in Fort Dodge, Iowa (Bloomberg).

PIZZA HUT: Six British Pizza Huts have unveiled menus written entirely in emojis, all in time for Sunday’s World Emoji Day. “Many of the items look easy enough to translate, with one pizza option including pictures of a tomato, basil plant, a green heart and a mushroom with the vegetarian ‘v’ sign next to it,” says the Daily Mail. “A crown, chicken and drumstick is slightly more obscure.” But if it all gets too difficult for some customers, there’s a traditional menu on hand (Daily Mail). Here’s an English-to-emoji translator.

YUM: Financial news site Seeking Alpha has published a transcript of Yum’s second-quarter conference call with analysts on Wednesday (Seeking Alpha).

AMAZON today disclosed plans to open its 10th California distribution center, in Sacramento. It’s the fourth center the retailer has announced for California alone over the past four months, and is expected to create more than 1,000 full-time jobs (press release). Amazon has more than 120 centers worldwide, including two in the Louisville area with a combined 6,000 employees, in Jeffersonville and Shephardsville.

FORD posted its best first-half for total European vehicle and passenger car sales since 2010, and best commercial vehicle sales since 1993 in its 20 traditional European markets (press release). The company’s philanthropic arm, the Ford Motor Company Fund, said it would award $400,000 in scholarships and grants to support programs encouraging Latino students to graduate from high school (press release).

And the U.S. Postal Service started selling first-class “forever” stamps today that commemorate four pickup trucks, including the 1948 Ford F-1 — the first F-Series truck — and the 1965 Ford F-100:

pr16_056

Ford’s Kentucky Truck Plant employs 5,100 workers, producing F-250 and F-550 Super Duty pickups, plus Expeditions, and Lincoln Navigators.

KFC: In the U.K.’s Plymouth, a 46-year-old man branded “too fat to work” on national television has vowed to chain himself to land set aside for a new KFC, in protest of the plans. Stephen Beer, who once gorged on three takeaways a day and weighed more than 420 lbs, is on a mission to raise awareness of childhood obesity, and says he’s “disgusted” by the thought of more fast-food chains in the city (Plymouth Herald).

In other news, presumptive GOP White House nominee Donald Trump Continue reading “Top U.S. health official: competition key to insurance markets in Humana-Aetna deal; British Pizza Huts are 😋 about their 🆕 menus; and Amazon adds 10th Calif. center”