Devyani International and Sapphire Foods to Merge, Form India's Largest Yum! Franchisee Footprint

Devyani International Limited (DIL) and Sapphire Foods India Limited (SFIL) have unveiled a plan to merge, creating a single, unified Yum! India franchisee for KFC and Pizza Hut. The boards of both companies approved the merger scheme in today's meetings, marking a strategic consolidation that aims to accelerate growth, scale, and profitability across India's QSR landscape. The merger is subject to customary regulatory approvals, including stock exchanges, the Competition Commission of India, National Company Law Tribunals, and the shareholders and creditors of both firms. The process is expected to take 12 to 15 months, after which the merger will become effective.

What changes hands and how it works

Merger structure: Sapphire Foods India Limited will merge with and into Devyani International Limited through a share-swap arrangement.

Swap ratio: For every 100 SFIL shares, holders will receive 177 shares of DIL.

Arctic International, a group company, will acquire about 18.5% of SFIL's paid-up equity from existing SFIL promoters, with an option to sell to a mutually agreed investor.

Strategic focus post-merger

- Accelerated KFC expansion
- Revitalization and long-term growth of Pizza Hut
- Scaled growth of DIL's emerging brands portfolio

Yum! Brands approvals and commercial terms

- Yum! Brands has sanctioned the consolidation of DIL and SFIL. As part of the approval, DIL and Yum! have agreed on enhancements to waivers across KFC and Pizza Hut to support store expansion and sustainable growth.

- Acquisition of KFC stores: DIL will acquire 19 Yum!-operated KFC restaurants in Hyderabad.

- Territory license and merger-related costs: DIL will make a one-time payment to Yum! India for merger approval and the license fee for the expanded territory.

- Yum! Brands' ongoing support reinforces the RJ Corp Group's confidence in the merged entity's growth trajectory.

Expected benefits and timeline

Market leadership and scale: The merged entity will form one of India's largest QSR platforms, expanding nationwide while excluding captive markets.

Growth unlock: A unified brand strategy should accelerate growth for both KFC and Pizza Hut.

Cost and operating efficiencies: Consolidated procurement, stronger vendor and landlord leverage, and streamlined operations.

Margin and balance-sheet advantages: Productivity gains and scale are expected to lift margins and improve cash flows, enabling faster expansion and better financing terms.

Synergy target: The companies anticipate annual synergies of INR 210–225 crore from the second full year of integrated operations.

Timeline: Full integration and realization of identified synergies are expected within 15 to 18 months from the merger's effective date.

The deal positions the combined entity as a dominant player in India's quick-service restaurant segment, benefiting from Yum! Brands' global brand play, RJ Corp Group's local strength, and the growing consumer demand for premium fast-casual dining experiences.

Commenting on the merger, Mr. Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited, said: "The consolidation of Devyani International Limited and Sapphire Foods India Limited marks a significant milestone and a decisive leap forward in our growth journey, resulting in DIL holding franchise rights across the entire Indian market for KFC and Pizza Hut brands. The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations.

This combination will allow us to realize meaningful economies of scale, leverage a unified technology platform, and strengthen our supply-chain capabilities. Together, these advantages will help unlock sustained value creation and long-term growth for our shareholders, customers, employees, and partners. We are grateful to Yum! Brands and its management team for placing their confidence in DIL as the sole, long-term partner for the future growth of KFC and Pizza Hut in India and for their support of this transformative merger."

Mr. Sumeet Narang, SFML nominee director of SFIL and Founder of Samara Capital, said: "Sapphire Foods was conceptualized in 2015 through the consolidation of multiple Yum! Brands franchisees, with a clear vision of building a scaled, institutionally strong QSR platform over time. We are extremely excited about this development, which brings together a single, unified franchisee for KFC and Pizza Hut in India through the merger with Devyani International Limited.

This transaction reflects the shared long-term vision and strong partnership between Samara Capital Group and RJ Corp. We are confident that, under RJ Corp's leadership, these iconic brands will continue to grow from strength to strength in the years ahead. India has the potential to become a true crown jewel within Yum!'s global markets, and this announcement represents a significant step in that journey."

Ranjith Roy, Yum! Brands CFO said: "Devyani International Limited and Sapphire Foods India Limited have been outstanding partners to Yum! for many years. India is a high-priority market for us with an abundance of white space for further growth and strong consumer reception for our brands. We are pleased to support this proposed merger to unlock a new phase of accelerated growth in the region and to advance supply chain operations, leading to a stronger, more resilient partner in India and greater value for both shareholder bases. We look forward to our continued partnership."

Shares of Devyani International Ltd was last trading in BSE at Rs. 147.95 as compared to the previous close of Rs. 148.00. The total number of shares traded during the day was 362114 in over 2242 trades.

The stock hit an intraday high of Rs. 149.75 and intraday low of 144.45. The net turnover during the day was Rs. 52766751.00.

Source : Equity Bulls

Keywords

DevyaniInternational Restaurants INE872J01023 SapphireFoods Merger Yum IndiaFranchise KFC PizzaHut