Devyani International and Sapphire Foods have agreed to combine their businesses, creating one of the biggest quick‑service restaurant groups in India.
What the merger means
The two companies run KFC and Pizza Hut restaurants across the country. By joining forces, they will manage all KFC and Pizza Hut outlets under a single operator backed by Yum! Brands.
Deal structure and share‑swap
- The merger will be done through a share‑swap. For every 100 shares of Sapphire Foods, shareholders will receive 177 shares of Devyani International.
- Arctic International, a Devyani group company, will buy about 18.5% of Sapphire Foods from its current promoters.
- After the merger, Sapphire Foods will be dissolved without a winding‑up process.
Timeline and approvals
- The deal is expected to close in the next 12‑15 months, with the combined operations starting in FY28.
- Sapphire Foods will merge into Devyani effective April 1, 2026.
- Full synergy benefits are projected for FY29, amounting to roughly ₹210‑₹225 crore.
- The merger still needs clearances from stock exchanges, the Competition Commission of India, the National Company Law Tribunal, and the shareholders of both firms.
Expected benefits
Analysts say the combined company will have:
- Revenue and EBITDA that are 50‑60% larger than today’s separate businesses.
- Cost savings of about 15% of the combined EBITDA, thanks to better buying power, shared technology and streamlined operations.
- Improved negotiating position with Yum! Brands, including better commercial terms and marketing rights.
Analyst outlook
Brokerages compare the new entity’s size and growth potential to that of Jubilant FoodWorks, noting that margins are currently weaker but expected to improve. One firm values the combined equity at roughly ₹38,700 crore, suggesting a potential upside of about 45% over the current market value.
Disclaimer
Remember, this is just an overview, not a prediction. Do your own research and consider talking to a qualified financial advisor before making any investment decisions.