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June 16 (Reuters) - Yum Brands YUM.N said on Tuesday it would sell its Pizza Hut chain for $2.7 billion, as the unit struggles with stiff competition in the fast-food market and cautious consumer spending.

Pizza Hut in Mainland China will be acquired by Yum China 9987.HK for $1.2 billion while the rest of the business will be acquired by private equity firm LongRange Capital for $1.5 billion, the company said.

The move follows Yum entering exclusive talks with LongRange in May, after its said it was reviewing strategic options, including a possible sale, for Pizza Hut, as the unit fell behind Yum's other fast-casual dining brands such as Taco Bell.

The fast-food industry is contending with sustained demand weakness, as growing adoption of GLP-1 weight-loss drugs encourages consumers to choose healthier foods.

The pressure has been compounded by rising inflation and a decline in consumer sentiment that has weighed on U.S. pizza giants already facing elevated commodity costs.