Private equity is buying Pizza Hut, but it’s not getting the whole pie

Fast food company Yum Brands is selling its most iconic brand: Pizza Hut. The deal will see Yum receive a $2.7 billion payout for the pizza chain, which was originally founded in Kansas in 1969. Here’s what you need to know about the sale and how Yum Brands stock (NYSE: YUM) is reacting. What’s happened? Today, Yum Brands announced that its board of directors has approved the sale of its Pizza Hut restaurant chain. The total pre-tax amount that Yum will receive for the sale is $2.7 billion. But Pizza Hut isn’t just going to one buyer. Yum is selling the brand to two different entities. The first is the private equity firm LongRange Capital. Pizza Hut will be the Connecticut-headquartered firm’s first restaurant chain. Other brands that LongRange Capital currently owns include the gym chain 24 Hour Fitness, the ski resort operator Alpin Unlimited, the burial casket company Batesville, the food manufacturer Bakkavor, and the materials science company US Synthetic. As part of this deal, LongRange Capital will pay Yum approximately $1.5 billion for its global Pizza Hut operations, excluding those in China. The second buyer of Pizza Hut is Yum China Holdings, a separate company from Yum Brands, though it was once owned by the U.S.-based giant. In 2016, Yum Brands spun off its Chinese division as a separate company focused solely on the Chinese market. Yum China Holdings will pay Yum Brands approximately $1.2 billion for its Pizza Hut operations in China. Why is Yum Brands selling Pizza Hut? The fact that Yum Brands has announced a sale of the iconic pizza chain isn’t a total surprise. As CNBC notes, Yum was known to have been exploring strategic options for the chain. Pizza Hut was once the world’s most popular pizza chain. However, it lost that title to Domino’s Pizza almost a decade ago and has since faced increased competition from food delivery platforms, which make it easy for customers to order from smaller, local pizza chains. Pizza Hut, once known as a sit-down r