Shares of Devyani International surged over 5% in early trade today, Thursday, January 2, after the company announced that Sapphire Foods India will be merged into Devyani International, creating one of the largest quick-service restaurant (QSR) platforms in the country.
Devyani International, which operates popular QSR brands such as KFC and Pizza Hut in India, said the proposed merger aims to consolidate operations and unlock meaningful synergies at a time when the fast-food sector is facing slowing same-store sales growth and margin pressures amid high living costs.
Under the merger scheme, Devyani International will issue 177 equity shares for every 100 shares of Sapphire Foods. The company expects annual synergies of Rs 210 crore to Rs 225 crore, starting from the second full year of operations after the merger becomes effective.
As part of the transaction, group company Arctic International will acquire around 18.5% of Sapphire Foods’ paid-up equity from existing promoters, with an option to subsequently assign the stake to a mutually agreed financial investor.
The proposed merger remains subject to multiple regulatory and statutory approvals, including clearances from stock exchanges, the Competition Commission of India, the National Company Law Tribunal, and approvals from shareholders and creditors of both companies. The approval process is expected to take 12 to 15 months.
Both Devyani International and Sapphire Foods are franchise partners of Yum Brands and together operate over 3,000 outlets across India and overseas, spanning KFC and Pizza Hut dine-in formats. The combined entity will compete with other major QSR operators such as Westlife Foodworld (McDonald’s India) and Jubilant FoodWorks (Domino’s Pizza).
At the time of writing, Devyani International shares were trading at Rs 155, up over 5%, reflecting positive market reaction to the proposed consolidation.
