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Yum says it's close to a yea-or-nay on a breakup

The parent of Pizza HutKFC and Taco Bell alerted investors yesterday that it’s close to revealing whether or not the company will break apart, a possibility that seems more likely with the addition to the board of a pro-restructuring activist shareholder.

“This has been a comprehensive, year-long process, working with our financial and legal advisors, and we are near its conclusion,” said Greg Creed, CEO of Yum! Brands.

The company has been under pressure from investors to split off either its weakest or strongest operations into a separate company. The over-performer is Taco Bell, which some say should be recast as a freestanding business. The biggest drag on Yum’s financial performance has been operations in China, where a turnaround has eluded the company despite a multi-year effort.

Yum has said that maintaining the company’s current structure makes the most sense for the near term, but acknowledged that it was considering alternatives.

That strategic review is near completion and will be presented soon to Yum’s board, the company said yesterday.

It noted that the board had been expanded to include a 15th director, Keith Meister, founder and managing director of Corvex Management, an investment firm that holds a 5 percent stake in Yum.

Corvex reportedly favors a restructuring, and Meister is known as an investor who is forthcoming with ideas and recommendations for companies where he’s placed his money.

“We have had a constructive dialogue with the board and management over the last several months,” Meister said in the statement released by Yum. “This is a company with multiple avenues for unlocking significant long-term value, and I look forward to working with the board and management to expeditiously finalize a plan that we believe can deliver that value to shareholders.”

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