Material Agreement (Form 8-K)

The Purchase Agreement

On June 16, 2026, Yum China Holdings, Inc., a Delaware corporation (the "Company" or "Yum China"), entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Yum! Brands, Inc., a North Carolina corporation ("Yum! Brands"). Yum! Brands and its affiliates are parties to existing master license and related arrangements with Yum China and its affiliates relating to the KFC, Taco Bell and Pizza Hut brands in the People's Republic of China (excluding the Hong Kong and Macau Special Administrative Regions and Taiwan, the "PRC"). Pursuant to the Purchase Agreement, on the terms and subject to the conditions set forth therein, Yum China has agreed to purchase, and Yum! Brands has agreed to cause its indirect wholly owned subsidiary, Yum! International Finance Company, LLC, a Delaware limited liability company, to sell, all of the issued and outstanding membership interests (the "Interests") of Willow Glade Investments, LLC, a Delaware limited liability company ("Willow Glade") (such transaction, the "Transaction"). At the closing of the Transaction (the "Closing"), Willow Glade, together with its wholly owned subsidiaries (collectively, the "Acquired Companies"), will hold the intellectual property and related rights for the Pizza Hut brand in the PRC. In connection with the Transaction, the Company and Yum! Brands have agreed to enter into certain Related Agreements (as defined in the Purchase Agreement) at or prior to the Closing, including an amendment and restatement of the Company's existing master license agreement with Yum! Brands for the KFC and Taco Bell brands in the PRC, which amended and restated agreement will be by and between YRI China Franchising, LLC ("YRICF") and Yum Restaurants Consulting (Shanghai) Company Limited ("YCCL") (as so amended and restated, the "Amended and Restated KFC/TB Master License Agreement"), and certain other agreements relating to the intellectual property rights for the Pizza Hut brand in the PRC.

Consideration

The transaction consideration for the Interests is US$1.2 billion in cash, payable at the Closing (the "Transaction Consideration"). The Transaction Consideration is fixed and is not subject to any post-Closing adjustment. Yum China intends to fund the Transaction Consideration through a combination of cash and debt financing.

Closing Conditions

The consummation of the Transaction is subject to the satisfaction or waiver of certain Closing conditions, including the absence of any law or governmental order that makes illegal or prohibits the consummation of the Transaction or the transactions contemplated by the Purchase Agreement or the ancillary agreements, the accuracy of the parties' respective representations and warranties (subject to certain materiality qualifiers), and the performance in all material respects of the parties' respective covenants. The consummation of the Transaction is not conditioned upon Yum China obtaining financing. The Purchase Agreement provides that each party is entitled to specific performance of the other party's obligations, including, in the case of Yum! Brands, the right to specific performance to cause Yum China to consummate the Closing and fund the Transaction Consideration. In no event shall the Closing occur prior to the earlier of (i) August 17, 2026 and (ii) the date specified by Yum China in a written notice to Yum! Brands, provided that Yum China's notice is delivered at least five (5) business days prior to such specified date.

Subject to the satisfaction or waiver, if permitted, of the Closing conditions described above, the Closing is expected to occur in the third quarter of 2026.

Termination Rights

The Purchase Agreement contains customary termination rights, including that the Purchase Agreement may be terminated (i) by the parties' mutual written agreement, (ii) by either party if the Closing has not occurred on or prior to November 16, 2026, subject to certain limitations, (iii) by either party in the event of certain uncured breaches by the other party that would cause the related Closing conditions not to be satisfied, provided that the terminating party is not then in material breach of the Purchase Agreement, and (iv) by Yum! Brands under specified circumstances if Yum China fails to consummate the Closing after all of its Closing conditions have been satisfied and Yum China is required to close pursuant to Section 2.2 of the Purchase Agreement, and it has received notice that Yum! Brands is prepared to close. If the Purchase Agreement is validly terminated, neither party will have liability to the other party except for fraud or willful breach. Damages for willful breach are not limited to reimbursement of expenses or out-of-pocket costs, and may include the benefit of the bargain lost by the non-breaching party. The Purchase Agreement does not provide for any termination fees.

Other Terms of the Purchase Agreement

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Amended and Restated KFC/TB Master License Agreement