China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊

YUM Brands (NYSE: YUM) has come out with details of its offer for Little Sheep (HKEx: 968), China’s leading hot pot restaurant chain, and the deal does indeed look yummy for investors, with the US owner of the KFC and Pizza Hut brands offering a 30 percent premium to Little Sheep’s value before the deal was announced. (company announcement) But shareholder reaction to the offer tells the real story behind this one, namely that there’s a huge degree of skepticism that China’s regulator will sign off on this one, even though nearly all observers agree there’s absolutely no grounds to kill this deal on anti-trust concerns. Little Sheep shares, after being halted at HK$5 pending the announcement, jumped to HK$6.15 after terms were given — a more than 20 percent jump but still well below the HK$6.50 offer price. I’ve seen lots of deals like this before and in most cases the stock jumps to just below the offer price when a buy-out is announced. So the fact that such a large gap remains here clearly speaks volumes. China has already shown an increasing willingness to kill deals that see foreign companies swallow up its emerging brands, as evidenced by its veto of Coke’s (NYSE: KU) attempt to buy leading juice maker Huiyuan (HKEx: 1886) two years ago. I’d really like to believe the regulator will let this latest deal pass, but I’m also increasingly skeptical that China will let another of its “famous brands” be swallowed up by an international player like YUM.

Bottom line: Momentum is swinging against YUM’s proposed acquisition of Little Sheep, which could once again highlight China’s bias against M&A of its major brands by foreign firms.

百胜<YUM.N>已宣布并购小肥羊<0968.HK>计划细节，此宗交易对投资者来说颇具吸引力，百胜出价较交易宣布前小肥羊股价溢价30%。但外界高度怀疑此宗交易能否获得中国监管部门批准，尽管多数观察人士认为不能以反垄断为由推翻此宗交易。小肥羊股价已跳涨至6.15港元左右，但仍远低於百胜收购出价。我以前看过许多类似交易，多数情况下宣布并购消息後，股价会涨至仅略低於收购价的水准。而小肥羊当前股价表现足够说明问题。从两年前中国否决可口可乐<KO.N>收购汇源果汁<1886.HK>，就可以看出中国越来越不愿让外国公司并购中国名牌企业。我真心希望监管部门能批准百胜并购小肥羊，但还是持怀疑态度。

一句话：百胜收购小肥羊阻力大，可能再次印证中国不愿意外国公司收购中国名牌企业。

Related postings 相关文章:

◙ YUM and Little Sheep – A Sweet Match If China Approves 美国百胜购小肥羊：甜蜜姻缘还靠中国政府成全

◙ McDonald’s Revs Up for China Drive-Thru 麦当劳寄望“得来速”汽车餐厅拓宽中国市场

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