By Evelyn Cheng , Staff Writer, CNBC:
Yum Brands, home of KFC, Taco Bell and Pizza Hut, may let activists have it their way. JPMorgan analyst John Ivankoe is back from the Yum China investor conference in Shanghai and says spinning off the fast food company’s China business has “moved from a ‘possibility’ to a ‘probability.'”
Pressure from the activists is mounting. Third Point disclosed holdings of 3.3 million shares in Yum on Friday, while the JPMorgan note said Corvex has a stake of more than 15 million shares, or above 3 percent. That gives the firms a combined holding of more than $2.5 billion in the $40 billion market cap, fast food chain operator, according to The Edge Consulting Group, a research firm specializing in spinoffs.
“The company (YUM) are not fighters and seem to embrace strategies that create value,” said Jim Osman, CEO of The Edge. “And as the valuation is being depressed by the Chinese business, it is very obvious to us and activist investors that a separation will create a pure play emerging market business and thus provide shareholders value.”