KFC Korea is set to be acquired by Orchestra Private Equity for KRW60 billion or about $56 million. It was reported that Yum! Brands Inc. and the Korean PE firm have joined forces to buy the fried chicken chain.
With the buyout, KFC Korea will also shift to a franchise system where the US headquarters will directly manage the chain. The deal between Yum! Brands and the Korean unit of KFC was revealed last week after they signed a stock purchase agreement to buy the local franchise brand from KG Group for $56.2 million.
According to Pulse News, Yum! Brands which is the parent company of KFC, will be the key investor in the deal. The KG Group owns the local franchise after acquiring it from CVC Capital Partners in 2017 for around KRW50 billion.
The sale of KFC Korea comes as the KG Group decided to get rid of its non-core assets to finance its acquisition of Ssangyong Motor Co. Sources shared that Orchestra PEF company has agreed to purchase a 100% stake in the South Korean operations of KFC.
Under the agreement, Orchestra PE will buy the entire ownership of KFC Korea, including the brand’s local domestic business license from the KG Group. In addition to this buyout deal, the PEF firm also inked a master franchise contract with Yum! Brands so it can freely open franchise store outlets in the country.
The Korea Economic Daily reported that KFC Korea has been lagging behind some fast-food brands operating in the region, such as Mom’s Touch and Burger King. Currently, it is in fourth place in the fast-food market based on revenue. It is behind Lotteria, Burger King, and McDonald’s even if its sales reached KRW210 billion last year.
Then again, it may be understandable why it is trailing behind the other restaurants. The number of its stores in the country is only 190, while Mom’s Touch operates 1,352.
Finally, as it acquires KFC Korea, Orchestra PE is planning to improve its financial conditions this year by injecting additional funds into the franchise through the purchase of new shares. KPMG is serving as the advisor for this acquisition deal.
Photo by: Hello I'm Nik/Unsplash


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