Corvex slices Yum stake in US$800m trade

2 min read
Americas
Anthony Hughes

Keith Meister’s activist hedge fund Corvex Management sold more than half its stake in restaurant group Yum Brands in a nearly US$800m unregistered block trade overnight Tuesday, market sources told IFR.

Morgan Stanley, the block buyer, reoffered 12m Yum shares on Corvex’s behalf at US$66.55 each, the low end of a US$66.55-$66.70 reoffer range and a 1.7% discount to last sale.

Yum shares were down more than 2% to US$66.26 in mid-session trading on Wednesday.

The sale cuts Corvex’s stake to about 9m shares from 21m previously (5.7%).

The block size was likely determined by volume restrictions on unregistered or Rule 144 block trades, which cannot exceed average weekly volumes for the past four weeks.

In Yum’s case that is about 12m shares.

The stock sale comes just days after Meister stepped down from Yum’s board, where he successfully nudged the company to spin off its Chinese operations in October 2016.

“With the China spin-off successfully executed, and Yum’s capital structure, management team and transformation plans in place, the company is set up for great success,” Meister said last week.

He said Yum would remain one of Corvex’s largest holdings.

Corvex first invested in the company in 2015 via a series of purchases, the biggest in late June of that year. He became a board member that October.

The fund retains 14.6m shares in Yum China, according to Thomson Reuters data.

Corvex and Yum did not respond to requests for comment.

Sources said the trade was executed from Morgan Stanley’s trading desk, not its ECM desk.

The deal comes a week after Morgan Stanley sold two-thirds of Arconic’s stake in Alcoa via an unregistered US$893m block trade.

Early Wednesday, Morgan Stanley also joined forces with UBS to lead the resale of 8.24m shares in private equity firm Apollo Global Management in a separate unregistered block trade.

The banks reoffered the shares at US$21.95-$22.00 before pricing at the lower end of that range versus Tuesday’s US$22.20 close.

The seller was likely the Abu Dhabi Investment Authority, which has been selling down its holdings in recent weeks.