Yum China to Acquire Pizza Hut China for $1.2B

By Greg Peters • Tuesday, June 16 16:10 • Permanent Link

Yum China Holdings said it will buy the Pizza Hut brand in mainland China from Yum! Brands for $1.2 billion, a deal that would shift the business from licensee to brand owner and eliminate the royalty fees it currently pays.

Pizza Hut China generated $2.3 billion in segment revenue in 2025 and $183 million in segment operating profit, according to the company. In the first quarter of 2026, it posted its 13th straight quarter of same-store transaction growth and its eighth consecutive quarter of restaurant margin and operating profit expansion.

The business operated 4,375 restaurants across more than 1,100 cities as of March 31, 2026, and Yum China said it is targeting more than 6,000 Pizza Hut stores by 2028. The company also said it aims to double Pizza Hut China’s operating profit by 2029 versus 2024.

Yum China said the acquisition is expected to close in the third quarter of 2026. It said the deal should immediately lift Pizza Hut China’s restaurant margins and operating margins once the license fees disappear, and that it should be accretive to diluted earnings per share starting in 2026 after closing, with mid-single-digit accretion in 2027 and 2028.

The company said its 2026 full-year financial guidance remains unchanged on a like-for-like basis.

Yum China also said it plans to finance the purchase with a mix of cash and debt. It said it remains committed to returning $1.5 billion in 2026 and then roughly 100% of annual free cash flow after subsidiary dividend payments to non-controlling interests beginning in 2027. That is expected to equal about $900 million to more than $1 billion annually in 2027 and 2028, with the amount expected to exceed $1 billion in 2028.

For KFC China, Yum China said the brand remains its main growth engine. KFC China had 13,454 stores as of March 31, 2026, and the company is targeting more than 17,000 stores by 2028. It also said KFC China will be eligible for a decade-long financial incentive from Yum! Brands tied to certain system sales growth targets.

The transaction values the business at an implied last-twelve-month P/E of 19.5x, which Yum China said is a 17% discount to the peer group median of 23.5x and a 24% discount to the peer group’s one-year average median of 25.7x. Today the company's shares have moved -1.2% to a price of $43.72. Check out the company's full 8-K submission here.

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