Yum China gets new leadership amid activist push for spin off

By Lisa Baertlein

(Reuters) - Yum Brands Inc on Tuesday announced new leadership for its China business as investor activists lobby for the owner of the KFC and Pizza Hut brands to spin off that business, which is its biggest driver of revenue and profit.

The management change sent shares of Yum up 2.1 percent to $86 in after-hours trading.

Yum said company veteran Micky Pant, 60, would replace retiring Sam Su, 63, as chief executive of the China division.

Su, who has been with Yum for 26 years, was instrumental in making the company the biggest Western restaurant chain in China with nearly 7,000 restaurants.

Pant, currently CEO of Yum's KFC Division, will become CEO of Yum China on Wednesday.

Yum spokesman Jonathan Blum declined comment on growing Wall Street speculation that the company will spin off its China operations. When asked if the China shake-up was made in preparation for such a move, Blum said, "No."

Su will serve as an executive adviser through February 2016 to assist with the management transition. Su will remain on Yum's board of directors, Yum said.

The company also announced that Joey Wat, 44, was promoted to CEO of KFC China. She was previously president of KFC China. Peter Kao, 58, was promoted CEO of the Pizza Hut brand in China. Kao was previously senior vice president and brand general manager of Pizza Hut China.

J.P. Morgan analyst John Ivankoe said in a client note in May that he came away from Yum's recent China investor conference with sense that a spin off of the China business was more a "probability" than a "possibility."

Hedge fund Corvex Management, which has been urging Yum to spin off its China operations, has said the business could be worth more than Yum's share price suggests.

Corvex did not immediately respond to a request for comment.

Yum's China business has been fighting to recover from a meat quality scare at one of its minor suppliers.

Blum, the spokesman, said sales at established restaurants in China have turned significantly positive in the current quarter.

(Additional reporting by Ramkumar Iyer in Bengaluru; Editing by Saumyadeb Chakrabarty)