LITTLE Sheep Group, operator of a hot-pot restaurant chain in China, soared more than 15 percent yesterday in its Hong Kong trading after it said the regulator has approved a takeover bid by Yum! Brands Inc.

The shares opened at HK$6.40 (83 US cents), the highest since the company went public in 2008, after it said in a statement that the Ministry of Commerce has given the acquisition the green light.

The stock closed 15.2 percent higher at HK$6.37, while the benchmark Heng Seng Index rose less than 0.1 percent to 19,678.47 points.

Yum! Brands proposed in May to acquire Little Sheep's outstanding shares to grow in China.

Yum! Brands, a United States-based fast food chain, will increase its stake in Little Sheep from 27.2 percent to 93.2 percent at a price of HK$6.50 per share under a HK$4.4 billion buyout plan to privatize the Inner Mongolia-based company.

Little Sheep's founding chairman Zhang Gang and non-executive director Chen Hongkai will continue to hold the remaining shares.

The details of the transaction will be disclosed to shareholders before next Monday, Little Sheep said in the statement.

Yum runs nearly 4,000 restaurants under different brands in China, including KFC and Pizza Hut. It became the second largest shareholder of Little Sheep in 2009 after buying a 19.9 percent stake for HK$493 million from private equity firms 3i and Prax.

Founded in 1999, Little Sheep has 179 self-owned restaurants and 274 franchisees in the Chinese mainland by the end of 2010. It also has outlets in Canada and the US.

Its revenue was 800 million yuan (US$126 million) in the first half of this year, an annual gain of 14.7 percent. But its net profit fell 19.6 percent from a year ago to 30.6 million yuan due to rapid expansion.