Devyani International Limited (DIL) and Sapphire Foods India Limited (SFIL) will merge, creating India’s largest quick-service restaurant (QSR) operator for Yum! Brands. DIL will acquire SFIL via a share swap of 177 DIL shares for every 100 SFIL shares. The merger is expected to take 12-15 months to complete and will enhance growth, scale, and profitability for the combined entity, solidifying DIL’s market position.
Merger Announcement
Devyani International Limited (“DIL”) and Sapphire Foods India Limited (“SFIL”) have announced a merger, approved by their respective Boards. This strategic move will consolidate the two companies into a single unified Yum! India franchisee, marking a significant development in the QSR landscape.
Terms of the Agreement
The merger will be executed through a scheme of arrangement involving a share swap. The agreed swap ratio is 177 equity shares of DIL for every 100 equity shares of SFIL. Additionally, Arctic International will acquire approximately 18.5% of SFIL’s paid-up equity share capital from existing promoters, with a possible assignment to another financial investor.
Strategic Benefits and Focus Areas
The merger is projected to take between 12 to 15 months to finalize, pending customary regulatory and statutory approvals. Post-merger, DIL aims to accelerate the expansion of KFC, strengthen and revitalize Pizza Hut, and scale growth for its emerging brands portfolio.
Yum! Brands Approval and Commercial Terms
Yum! Brands has approved the consolidation. As part of this, DIL has agreed on key commercial terms, including enhancements to certain waivers for Pizza Hut and KFC, and acquiring 19 KFC restaurants currently operated by Yum! India in Hyderabad. DIL will also pay a one-time charge for merger approval and territory license fees.
Expected Synergies
The merged entity anticipates several benefits, including: creation of a market leader, unlocking brand growth for KFC and Pizza Hut, economies of scale, operational and capability consolidation, margin expansion, and balance sheet strengthening. DIL expects an overall synergy of INR 210 to 225 crores annually starting from the second full year of integrated operations. The full integration is expected within 15 to 18 months from the merger’s effective date.
Leadership Perspectives
Mr. Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited, emphasized that the merger marks a significant milestone, granting DIL franchise rights across the entire Indian market for KFC and Pizza Hut, along with a stronger international presence in Sri Lanka.
Mr. Sumeet Narang, SFML nominee director of SFIL and Founder of Samara Capital, highlighted the vision behind Sapphire Foods and expressed excitement about creating a single unified franchisee for KFC and Pizza Hut in India.
Ranjith Roy, Yum! Brands CFO, stated his support for the merger, citing India as a high-priority market and noting that it will lead to a stronger and more resilient partnership.
Source: BSE
