Devyani International Ltd (DIL) and Sapphire Foods India Ltd (SFIL) have approved a scheme of arrangement to merge Sapphire Foods with and into Devyani International, paving the way for the creation of a single, unified franchisee for Yum! Brands’ KFC and Pizza Hut businesses in India.
Boards approve merger, regulatory clearances awaited
The merger proposal was approved by the boards of both companies at meetings held on Thursday. The scheme remains subject to customary regulatory and statutory approvals, including clearances from stock exchanges, the Competition Commission of India (CCI), the National Company Law Tribunal (NCLT), as well as approvals from shareholders and creditors of both entities. The companies expect the approval process to take approximately 12 to 15 months, following which the merger will come into effect.
Share-swap structure and promoter stake acquisition
Under the proposed structure, Sapphire Foods will be merged with and into Devyani International through a share-swap arrangement. As per the approved swap ratio, shareholders of Sapphire Foods will receive 177 equity shares of Devyani International for every 100 equity shares held in Sapphire Foods.
As part of the transaction, Arctic International, a group company, will acquire around 18.5 per cent of Sapphire Foods’ paid-up equity share capital from existing promoters, with an option to assign this stake to a mutually agreed financial investor.
Expansion plans and operational consolidation
Post-merger, the combined entity plans to accelerate the expansion of KFC across India, strengthen and revitalise the Pizza Hut brand for long-term sustainable growth, and scale up Devyani International’s emerging brands portfolio.
In addition, Devyani International will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. The company will also make a one-time payment to Yum! India towards merger approval and the licence fee for the additional territory.
Jaipuria: Merger a decisive leap in growth journey
Commenting on the development, Ravi Jaipuria, non-executive chairman of Devyani International, said the consolidation marks a major milestone for the group. “The consolidation of Devyani International and Sapphire Foods India 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,” he said.
Jaipuria added that the merger also brings a strong international footprint in Sri Lanka, complementing Devyani’s existing overseas operations. “This combination will allow us to realise 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,” he said.
He also acknowledged Yum! Brands’ support for the transaction, saying the group was grateful for the confidence placed in Devyani International as the sole long-term partner for the future growth of KFC and Pizza Hut in India.
Samara Capital sees India as Yum!’s ‘crown jewel’
Sumeet Narang, nominee director of SFIL and founder of Samara Capital, said the merger aligns with the original vision behind Sapphire Foods. “Sapphire Foods was conceptualised in 2015 through the consolidation of multiple Yum! Brands franchisees, with a clear vision of building a scaled, institutionally strong QSR platform over time,” he said.
Calling the merger an exciting development, Narang said it brings together a single, unified franchisee for KFC and Pizza Hut in India. “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,” he added.
He further noted that India has the potential to become a “true crown jewel” within Yum!’s global markets, and said the announcement represents a significant step in that direction.
Yum! Brands backs merger for accelerated growth
Ranjith Roy, chief financial officer of Yum! Brands, described Devyani International and Sapphire Foods as long-standing partners. “India is a high-priority market for us with an abundance of white space for further growth and strong consumer reception for our brands,” he said.
Roy added that Yum! Brands is pleased to support the proposed merger to unlock a new phase of accelerated growth in the region. “The transaction will help 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,” he said.
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