UPDATE 2-Third Point takes stake in Yum! Brands, stock climbs
(Adds comment from Yum!, details; updates share price)
By Svea Herbst-Bayliss
BOSTON May 1 (Reuters) - Billionaire investor Daniel Loeb said on Friday his hedge fund has taken a new position in Yum! Brands, sending the fast-food restaurant company's stock up nearly 7 percent.
Third Point LLC, Loeb's $17.5 billion firm, bought into Yum! during the first quarter after determining it has "turned the page on recent trouble in its Chinese business," and that profit would recover dramatically over the next one to two years.
"We think investors should want to own Yum! for its unique open-ended middle-class growth story in China and its strong and growing franchise-led cash flows outside China," Third Point said in the letter to investors, which was seen by Reuters.
Yum!'s stock closed at $91.90, up 6.91 percent.
A Yum! spokeswoman said: "We appreciate their confidence and investment in Yum Brands."
Third Point did not disclose how much it invested in Yum!
It gave Yum! management strong marks for having tackled two food-safety problems in China over the past three years and said it was focused on narrowing the performance gap between its KFC and Pizza Hut brands and competitors. Continued...