Shares of Yum China Holdings, Inc. (NYSE:YUMC), China's largest restaurant company, are up 15% as of 12:15 p.m. EDT Thursday after reports that Hillhouse Capital is in discussions to acquire it. The fast-food company has over 8,100 restaurants including KFC, Pizza Hut, and Taco Bell.
Hillhouse is an investment firm founded in 2005 with investments in a list of well-known companies such as Baidu, JD.com, and even the short-term home rental service Airbnb. Goldman Sachs is advising Yum China and Morgan Stanley is advising Hillhouse, according to sources for the news website The Information.
While the 15% pop Thursday is welcomed by investors, especially considering the stock's recent downgrade, it's wise to keep in mind that discussions are in the early phase and this is far from a done deal. In fact, a transaction value is still being discussed, and talks could derail any day.
However, investor excitement is building. Perhaps we'll get a few more details during the company's upcoming second-quarter earnings conference call on Aug. 1.