Yum! Adds Activist Investor To Its Board, Reviews Strategies

Yum! Adds Activist Investor To Its Board, Reviews Strategies
KFC Marufish / Flickr CC BY-SA 2.0

Yum! Brands has added an activist investor – who was a deputy to Carl Icahn – in its board, which resulted in the company shares rising in aftermarket trading.


The announcement came Thursday, after the parent of KFC and Pizza Hut said that Keith Meister will join the board to devise strategies to uplift the company struggling to keep up the sales in China. Meister runs Corvex, which is Yum’s biggest shareholder. According to Financial Times, Corvex has a roughly 5-percent stake.

As suggested by a food supplier investigation and because of a slowing economy, the sales of KFC and Pizza Hut experienced a downslide in China. A disappointing quarter for same-store sales was reported by the company in China, which constitutes half of the company’s revenue, last week.

As reported by Financial Times, as much as 57.5 percent of sales was generated by the Chinese market in the company’s fiscal third year; but revenues only increased 7 percent from the year-earlier period. Same-store sales in China could be in the bracket of 0 to 4 percent. While KFC may experience better results, Pizza Hut will see a weaker standing. CEO Greg Creed said in a statement that the company has been evaluating its strategic options and has consulted with financial and legal advisers.

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Meister called for Yum to cut its China business in order to create more shareholder value and form an entity that will be “levered to the endless growth to the Chinese middle class.” In order to enhance its sales, the company should spin off its China division. “This is a company with multiple avenues for unlocking significant long-term value, and I look forward to working with the Board and management to expeditiously finalize a plan that we believe can deliver that value to shareholders,” Meister said.

According to Bloomberg, it has been suggested that the company could also benefit by spinning off its Taco Bell chain. Last week, Creed said, “The Yum board of directors regularly review strategic options to optimize long-term shareholder value, including those involving our corporate structure.”