UPDATE 3-Yum puts Long John Silver's and A&W up for sale

Tue Jan 18, 2011 4:42pm EST

* Yum to focus on China, other international markets

* Analyst says sale price could be around $150 mln

* Yum shares close up 2.9 percent (Adds analyst comment, statistics on restaurant purchases by private equity firms, byline; updates stock activity)

By Lisa Baertlein

LOS ANGELES, Jan 18 (Reuters) - Yum Brands Inc (YUM.N) has put its Long John Silver's and A&W All-American Food Restaurants up for sale as it focuses on growth in China and other international markets, the company said on Tuesday.

Yum, which gets the majority of its profits from outside the United States, wants to build more KFC, Pizza Hut and Taco Bell restaurants in places like Asia, Europe and Africa. [ID:nN08114643]

A&W, known for its root beer, and quick-service seafood chain Long John Silver's have a small international footprint and account for just 1,630 of Yum's more than 37,000 restaurants globally.

"We do not believe Long John Silver's and A&W-All American Food restaurants fit into our long-term growth strategy," Yum Chief Executive Officer David Novak said in a statement.

The Louisville, Kentucky-based company bought both chains for $320 million in 2002 and said it did not expect their eventual sale to have a material impact on its ongoing earnings or cash flow.

A&W was founded in 1919 and Long John Silver's debuted 50 years later.

Long John Silver's and A&W combined to contribute as much as 2 percent of U.S. operating profit and less than 1 percent total operating profit in 2009, Stifel Nicolaus analyst Steve West said in a client note.

In an email, West said the two companies could sell for a "tad" more than $100 million to $150 million and that a private equity firm would be the most likely buyer.

"The expected gain from the sale is likely to offset the expected future cash flows and should not affect the current share valuation as we expect the deal would not be completed at any meaningful premium," West said.

There were about $8 billion in restaurant merger and acquisition deals in the U.S. last year, mostly driven by private equity, consultancy AlixPartners said in a recent report.

3G Capital's $3.3 billion purchase of Burger King made the biggest splash last year, when chains like Carl's Jr and Hardee's also sold. [ID:nN02193380]

In 1998, when Yum was spun-off from PepsiCo (PEP.N), 22 percent of its profits came from international markets. Today, about 65 percent of the company's profits are from its China and international divisions, and Yum expects that percentage to grow to 75 percent by 2015.

Yum shares closed up 2.9 percent at $49.25 on the New York Stock Exchange. (Reporting by Lisa Baertlein; Editing by Maureen Bavdek, Lisa Von Ahn and Bernard Orr)

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