Axios Pro: Retail Deals

March 14, 2022

Axios Pro Exclusive Content

🥧 Pi Day, Retail Readers! See below for more on this particular day.

🌡 Richard is not feeling well today, so Mike's hopping in.

1 big thing: Yum China's full plate

Illustration of magnifying glass over china's national star

Illustration: Eniola Odetunde/Axios

Yum China Holdings said today its sales are deteriorating amid a surge in COVID-19 cases across China and strict lockdowns imposed by Beijing.

  • This is an added dose of bad news after Yum China (a licensee of U.S.-based Yum Brands that operates KFC, Pizza Hut and Taco Bell brands) said on Friday that the SEC's broad accounting investigation may cause it to delist from the U.S.

Why it matters: The SEC's probe, which looks across a range of industries, will further squeeze companies with a major presence in the U.S. and China, at a time when Asian stocks are getting hammered and East-West deal-making is at a trickle.

  • For example, M&A that had any Chinese involvement nudged up 2.8% to $580 billion last year, while global deals skyrocketed by 66%, according to Refinitiv.

Catch up fast: Beijing bars foreign inspection of documents from local accounting firms, which makes it tricky for U.S. regulators to spot potential frauds or gaps that could burn American investors holding New York-listed shares.

What's next: U.S.-China relations aren't getting any better, and the former standard of dual-listed shares for U.S.-based franchises with a big China presence now seems set to reverse course.

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