Sapphire Foods, which manages Yum! Brands restaurants like KFC and Pizza Hut, is set to merge with Devyani International Ltd. This merger will occur through a share-swap ratio. Both companies’ boards approved the merger plan during their meetings on Thursday. This strategic move aims to consolidate the two quick-service restaurant (QSR) operators into a single Yum! India Franchisee for KFC and Pizza Hut.
The merger awaits several regulatory and statutory approvals. These include permissions from stock exchanges, the Competition Commission of India, the National Company Law Tribunals, and the shareholders and creditors of both firms. The approval process is anticipated to take around 12 to 15 months before the merger becomes effective.
Strategic Consolidation and Growth
Upon completion, Devyani International Ltd (DIL) will emerge as one of India’s largest QSR operators. The merger will combine operations from both companies, setting the stage for accelerated growth, scale, and profitability. The scheme of arrangements specifies that 177 equity shares of DIL will be issued for every 100 equity shares of Sapphire Foods India Ltd (SFIL).
Arctic International, a DIL group company, plans to acquire about 18.5% of SFIL’s paid-up equity share capital from current SFIL promoters. There is also an option to assign this acquisition to a mutually agreed financial investor. The US-based Yum! Brands has already approved this consolidation between DIL and SFIL.
Expansion and Synergy Benefits
DIL will also acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. This acquisition aligns with DIL’s strategy to expand its base in India. Additionally, DIL will pay a one-time charge to Yum! India for merger approval and a license fee for additional territory.
The proposed merger is expected to create significant synergy benefits. It aims to form one of India’s largest QSR platforms with an enhanced national footprint, excluding captive markets. A unified brand strategy for KFC and Pizza Hut is anticipated to unlock further growth opportunities.
Financial Projections and Market Presence
DIL expects an annual synergy benefit ranging from Rs 210 to 225 crore starting from the second full year of operations post-merger. Last year, DIL acquired Sky Gate Hospitality, which owns brands like Biryani By Kilo and Goila Butter Chicken.
Ravi Jaipuria, DIL’s Non-Executive Chairman, commented on the merger’s potential benefits: “The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations.” He highlighted that this combination would enable DIL to achieve economies of scale, leverage technology platforms, and enhance supply-chain capabilities.
Unified Franchisee Vision
Sumeet Narang, SFML nominee director of SFIL and Founder of Samara Capital, expressed enthusiasm about the development: “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.”
Yum! Brands CFO Ranjith Roy stated: “DIL and SFIL have been outstanding partners to Yum! for many years. We are pleased to support this proposed merger to unlock a new phase of accelerated growth in the region.”
SFIL holds franchise rights for operating KFC outlets in 10 states and Pizza Hut outlets in 11 states across India. Additionally, SFIL operates over 1,000 restaurants in India and Sri Lanka through its subsidiaries managing KFC, Pizza Hut, and Taco Bell outlets.
DIL stands as the largest franchisee for Yum! Brands’ QSR chains – KFC and Pizza Hut in India. It also holds exclusive franchise rights for Costa Coffee, Tea Live, New York Fries, and Sanook Kitchen in India. As of September 30, 2025, it operates stores across more than 280 cities in countries like India, Nigeria, Nepal, and Thailand.
With inputs from PTI
