Pizza Hut to Be Sold for $2.7 Billion by Yum Brands

Pizza Hut, a struggling restaurant chain, will be sold by Yum Brands for $2.7 billion. Yum Brands announced in February its intention to sell Pizza Hut and noted plans to close 250 U.S. restaurants. The chain has faced challenges with outdated stores and increased competition.

Founded in 1958 in Wichita, Kansas, Pizza Hut was acquired by PepsiCo in 1977. PepsiCo later spun off its restaurant division in 1997, creating Yum Brands. On Tuesday, Yum Brands revealed that private equity firm LongRange Capital will purchase Pizza Hut, excluding the mainland China branch, for about $1.5 billion. Meanwhile, Yum China Holdings Inc. will acquire the mainland China business for around $1.2 billion.

Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry, stated Yum Brands CEO Chris Turner.

Yum Brands, which also owns KFC and Taco Bell, began reviewing strategic options for Pizza Hut in November. The chain reported declining sales at comparable stores.

Neil Saunders, managing director of GlobalData, remarked, Pizza Hut has long been the weak link in Yum’s portfolio. Despite efforts to revitalize the brand and shut underperforming locations, it has become increasingly clear that pushing the division back into growth will require a level of investment and patience that Yum is just not prepared to commit to. Selling Pizza Hut allows Yum Brands to focus more on its stronger-performing brands, Saunders added.

Yum Brands, headquartered in Louisville, Kentucky, expects both transactions to close in the third quarter. The company’s stock dropped slightly before the market opened.