Yum Brands is selling the struggling Pizza Hut restaurant chain for a total of $2.7 billion. The sale will split ownership of the chain between a U.S.-based private equity firm and a Chinese restaurant company.
Private equity firm LongRange Capital will purchase Pizza Hut's operations outside of mainland China for approximately $1.5 billion. The mainland China business will be acquired by Yum China Holdings Inc. for about $1.2 billion. Louisville, Kentucky-based Yum Brands expects both transactions to close in the third quarter.
The decision comes as the chain struggles with outdated stores, growing competition, and declining sales at comparable stores. Yum Brands, which also owns KFC and Taco Bell, began a strategic review in November and announced in February that it was considering selling the chain, which had looked to close 250 U.S. restaurants.
Founded in 1958 in Wichita, Kansas, Pizza Hut was acquired by PepsiCo in 1977 and later spun off into Yum Brands in 1997. Yum Brands CEO Chris Turner stated that under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry.