Yum China Holdings has finalised the purchase of the Pizza Hut brand rights in Mainland China from Yum! Brands in a deal valued at $1.2bn.

First announced in June, the transaction transfers ownership of the Pizza Hut brand in this market to Yum China, which has been operating the chain locally for 36 years.

Yum China CEO Joey Wat said: “Becoming the owner of the Pizza Hut brand in Mainland China is a major breakthrough for us, after operating the brand in the market for 36 years.

“In the near term, the savings in licence fee payments to Yum! Brands are expected to make Pizza Hut's restaurant margin closer to KFC's.

“Over the longer term, we expect that brand ownership will give us greater strategic flexibility and allow us to respond more nimbly to market opportunities and consumer needs. In 2027 and 2028, we expect to accelerate Pizza Hut's net new store openings from the original target of over 600 to more than 800 per year.”

The company added the removal of the 3% licence fee payable to Yum! Brands is expected to add 2.8% to Pizza Hut’s restaurant and operating profit margins, net of VAT.

After taking into account deal-related expenses, interest and financing charges, and taxes, and excluding any potential incremental growth from Pizza Hut, Yum China expects the acquisition to be accretive to diluted earnings per share.

The company forecasts the impact to be slightly accretive in 2026, and mid-single-digit accretive in 2027 and 2028.

To fund the transaction, Yum China arranged an offshore yuan-denominated bridge loan, equivalent to approximately $1.2bn.

The facility has a tenor of up to 12 months and carries an interest rate of 2%. Yum China, regarded as largest restaurant company in China, operates more than 19,000 restaurants under six brands in the country.