Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？
The latest quarterly results from Yum Brands (NYSE: YUM) are once again all about China, with strong performance from that market salvaging an otherwise dismal period for the operator of the KFC and Pizza Hut chains. But for followers of this company, what’s equally interesting in Yum’s quarterly results announcement is what’s NOT included, namely any mention of its pending purchase of leading Chinese hot pot chain Little Sheep (HKEx: 968), which is still awaiting regulatory approval nearly 6 months after the deal was first announced. First a look at the third quarter numbers, which showed that Yum’s China business boomed in just about every way, even as operating profit in its home US market slipped 16 percent. (company announcement) Yum’s China revenue leaped 35 percent, while its China same-store sales and operating profit rose 19 percent and 7 percent, respectively. The only negative China figure in the results was store margins, which slipped to 21.3 percent this year from 25.2 percent in 2010 as inflation in China took a toll. But amid all those rosy figures, there was no mention at all of Yum’s pending $500 million acquisition of Little Sheep, a relatively straightforward deal which the company first announced in April but still hasn’t received regulatory approval. (previous post) Yum provided a brief update of sorts on the deal in its last quarterly results by mentioning it had set aside funds for the purchase, seeming to indicate it still believed the deal would get regulatory approval. (previous post) It’s hard to read too much into the failure to mention the deal in its latest results announcement, as perhaps there’s just nothing new to add. The most recent US-China trade frictions that have seen the US Senate approve a bill to punish China for currency manipulation could add an interesting twist to this deal. Beijing’s approval of the Little Sheep deal now would send a strong message that it’s committed to fair trade, and could help dispel some of the anti-China rhetoric on Capitol Hill. Still, one never knows with China, and the regulator could also choose to veto the deal in an angry response to the US Senate’s move, which would only heighten tensions. I honestly think the latter is less likely to happen as China has traditionally tried to defuse this kind of friction. Accordingly, I wouldn’t be surprised to see the Little Sheep deal finally approved in the next month as a goodwill gesture aimed at mollifying tensions.
Bottom line: China is likely to finally approve Yum Brands’ pending purchase of the Little Sheep hot pot chain in the next month to try to diffuse trade tensions with the US.
Related postings 相关文章:
◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊
◙ China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊
◙ 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
