Owner of the KFC fast-food chain, offered to take Little Sheep Group Ltd For $862 Million

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Yum! Brands Inc., owner of the KFC fast-food chain, offered to take Little Sheep Group Ltd. (968) private in a deal that values the operator of hot pot restaurants in China at HK$6.7 billion ($862 million).
Su said in the same conference call that Yum believes Little Sheep has the potential to tap demand in overseas markets for hot pot, a type of cuisine in which various ingredients are cooked in a simmering pot by the diners. There is no specific expansion plan, he said.
“Yum will help to improve Little Sheep’s management skills and bring in more opportunities to tap the global market,” Titus Wu, an equity analyst at DBS Vickers (Hong Kong) Ltd., said by telephone from Hong Kong today. “It’s also good for Yum because it finally has a Chinese company in its global portfolio,” said Wu, who recommends buying Little Sheep’s stock.
The Chinese restaurant company’s 2010 net income gained 21 percent, according to a filing last month.

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“With a global network and rich experience in brand building, Yum will join hands with Little Sheep to explore feasible ways to introduce hot pot to overseas markets,” Su said.
Little Sheep operated 179 self-owned restaurants and had 274 franchisees in mainland China, according to its 2010 annual report. Zhang reiterated today that the company plans to open 40 outlets this year.

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