Yum! Brands sells struggling Pizza Hut in $2.7 billion deal

Yum! Brands said Tuesday that it is selling Pizza Hut in a $2.7 billion deal that will split ownership of the restaurant chain between a U.S. private equity firm and a Chinese restaurant company.

Pizza Hut, excluding the mainland China business, will be sold to LongRange Capital for $1.5 billion, while Pizza Hut China will be sold by Yum! China for $1.2 billion, the company said in a news release.

"Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry," Yum Brands CEO Chris Turner said in a statement.

The sale comes after a challenging period for the pizza chain, marked by poor performance. Yum's latest earnings report shows Pizza Hut's sales growth lagging that of its other major restaurant chains, such as KFC and Taco Bell. In February, Yum! Brands said it would close 250 Pizza Hut locations in the U.S. The pizza chain has over 6,000 locations nationwide.

"Pizza Hut has long been the weak link in Yum's portfolio," Neil Saunders, managing director and retail analyst at GlobalData, said in an email Tuesday. "Despite efforts to revitalize the brand and shut underperforming locations, it has become increasingly clear that pushing the division back into growth will require a level of investment and patience that Yum is just not prepared to commit to."

Pizza Hut is losing market share to Domino's, which has outperformed the chain in ordering, delivery, menu innovation and marketing, Saunders added.

Yum! Brands started exploring options for Pizza Hut in November following declining comparable-store sales.

Pizza Hut was founded in 1958 in Wichita, Kansas. PepsiCo acquired the chain in 1977 but spun off its restaurant division in 1997, which became Yum! Brands.