(File photo)

Although the development of western fast food in China has had setbacks in recent years, they still have the upper hand when selling stock rights. As many Chinese companies rushed into the franchise of McDonald’s China restaurants, the parent company of KFC Yum imposed new terms on the investments, which has delayed the sales process.

According to the report of Bloomberg on June 28, potential bidders including Singapore state investment company Temasek Holdings Pte and Chinese private equity firm Primavera Capital Ltd. missed a deadline earlier this month to submit offers for a minority stake in the business. The suitors held off submitting bids after Yum sought to impose new terms on the investments.

According to informants, under the stricter terms, Yum wouldn’t be obliged to pay royalties to the China business to use any new products developed in the country, according to one of the people. Yum also said it wouldn’t share the burden for some of the ad spending of Chinese companies.

The investors also indicated they disagree with Yum’s proposed valuation of $10 billion for the China unit, which accounts for more than half of company revenue.

Yum last year bowed to activist pressure and agreed to spin off its China business into a separate publicly traded company after a prolonged sales slump caused by food-safety scandals. Since the announcement of the spinoff in October, Yum has turned in stronger same-store sales results from KFC in China, but its Pizza Hut division has continued to falter. In this march, news was disclosed that Yum was going to sale 20 percent of its stock right before going public. 

The sellers' market for Yum shows that capitals prefer its assets. Catering is an important part of consumption and China's consumer market has great potential, so for insiders, it is no doubt a good investment. 

Currently, Yum has over 6,900 restaurants in China. And after the spinning off, the company plans to expand the number to over 20,000.