Yum! Brands Is Selling Pizza Hut. Investors Should Be Cautiously Optimistic.
Key takeaways
- The company is selling Pizza Hut in two transactions.
- The $2.3 billion is an immediate win for the balance sheet.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
YUM NVDA Yum! Brands (NYSE: YUM) is burning the pizza. The company is selling Pizza Hut in two transactions. First, Pizza Hut outside of mainland China will go to Long Range Capital, a private equity firm. Secondly, Pizza Hut in China will be sold to Yum China. All told, Yum! Brands will net about $2.3 billion from the sales.
The $2.3 billion is an immediate win for the balance sheet. In theory, the plan to sell Pizza Hut and focus on growth opportunities within KFC and Taco Bell is a good one. Both KFC and Taco Bell have healthier unit economics and clearer paths to expanding their global footprint.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »