On March 25, 2009 the Chinese division of the company Yum! Brands, Inc., headquartered in Shanghai, announced the intention to acquire 20 per cent of Little Sheep - an Inner Mongolia-based hot pot business with outlets around China. As a result of this deal, the value of which is 493 million Hong Kong dollars (US$63.7 million), Yum! Brands will become the second largest shareholder in Little Sheep, after Possible Way International, its controlling shareholder, registered in the British Virgin Islands. Yum! Brands plans to acquire more than 205 million shares of two UK-based private equity firms, and of BVI-based Possible Way International.
The proposed price of shares of BVI-controlled Little Sheep is 2.4 HK dollars each, and the deal is planned to be completed this summer. Upon the completion of the deal, the combined annual operating income of Yum! and Little Sheep in mainland China is expected to be about 32 billion yuan (US$4.71 billion), making less than 2 per cent of the restaurant and catering business, so the deal would not lead to a monopoly situation in China.
Also, spokesman for Yum! Brands said that at the moment the company has no plans to build up larger stake in Little Sheep, and does not plan to participate in its day-to-day business administration.
Yum! Brands, Inc. is a parent company of chain restaurants including KFC and Pizza Hut, operating about 3,000 stores in China. Little Sheep was founded in Baotou in 1999, and now runs mutton-based hot pot catering and franchising business.
