Regular readers of this blog know that Yum! Brands has been an investor in the Chinese casual dining “hot pot” chain Little Sheep since 2009.
The chain’s name comes from the use of lamb in the traditional Chinese disk known as Mongolian hot pot which is the restaurant’s staple item.
Its stake was 27% but now Yum! has announced it will spend $586MM to acquire all but 93.2% of Little Sheep Group Ltd. remaining 6.8% will remain with Little Sheep co-chairmen and founders, Zhang Gang and Chen Hongkai. Shanghai-based Yum! Brands China Division has 4,000 KFC and Pizza Hut restaurants in China, opening over 500 new stores last year. Of those, KFC accounts for the vast majority (3,300 units). According to China Daily, Little Sheep has 453 restaurants.
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[...] YUM! Brands will acquire China’s Little Sheep Group, Ltd. The purchase is through a privatization “scheme” that will require court approval in the Cayman Islands (does anyone seriously think the court will demur?). The chain sells Mongolian-style hot pot across China. Its founders, Zhang Gang and Chen Hongkai, will retain minority shareholder status, and will stay on has brand consultants with Mr. Zhang having the title of “Founding Chairman.” Little Sheep is China’s first native restaurant chain success story. Our blog first reported the likely acquisition of Little Sheep by Yum! in May of 2011. [...]