Devyani International and Sapphire Foods Announce Merger

Devyani International Limited (DIL) and Sapphire Foods India Limited (SFIL) have announced a merger to consolidate their operations under a single Yum! India franchisee for KFC and Pizza Hut. The Board of Directors of both companies approved the scheme of arrangement, which is subject to regulatory and statutory approvals. The merger is expected to create one of the largest quick-service restaurant (QSR) operators in India, combining the operations of both entities.

The merger will be executed through a share-swap mechanism, with a swap ratio of 177 equity shares of DIL for every 100 equity shares of SFIL. Additionally, Arctic International, a group company, will acquire approximately 18.5% of SFIL’s paid-up equity share capital from existing SFIL promoters, with an option to assign this to a mutually agreed financial investor. DIL will also pay a one-time charge to Yum! India for merger approval and the license fee for the additional territory.

Operationally, the merged entity will focus on the accelerated expansion of KFC and the revitalization of Pizza Hut for sustainable growth. The merger will also facilitate the scaled growth of DIL’s emerging brands portfolio. Yum! Brands has approved the consolidation, agreeing to certain waivers to enhance long-term alignment on store expansion and sustainable growth for both KFC and Pizza Hut. As part of the transaction, DIL will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad.

The merger process is expected to take approximately 12 to 15 months to complete, pending the receipt of all necessary approvals from stock exchanges, the Competition Commission of India, the National Company Law Tribunal(s), and the shareholders and creditors of both companies. The full integration of the two entities and the realization of synergy benefits are anticipated within 15 to 18 months from the effective date of the merger.

The merger involves several key parties, including Devyani International Limited, which will become the surviving entity, and Sapphire Foods India Limited, which will merge into DIL. Arctic International will play a role in acquiring a significant stake in SFIL. Yum! Brands has provided its approval and will continue to support the merged entity as a key franchise partner in India.

This merger is significant in the context of the Indian QSR market, as it positions the merged entity as a market leader with enhanced scale and national footprint. The unified brand strategy is expected to unlock growth for both KFC and Pizza Hut, while economies of scale will lead to cost efficiencies through consolidated procurement and stronger negotiating leverage with vendors and landlords. The merger is also expected to improve profitability through productivity gains and overhead optimization.

Devyani International Limited is one of India’s largest QSR operators, with a network of over 2,000 stores across multiple countries. It is the largest franchisee of Yum! Brands in India and Nepal and holds franchise rights for several international brands. The company has also developed strong indigenous brands and expanded its Indian cuisine offerings through strategic acquisitions.