KFC operator Sapphire Foods’ merger with Devyani International to create QSR giant

Under the proposed transaction, Sapphire Foods India will merge with and into Devyani International through a share-swap mechanism. As part of the deal, DIL will issue 177 equity shares for every 100 equity shares held in SFIL. Arctic International, a group company, will acquire around 18.5 per cent of SFIL’s paid-up equity share capital from the existing promoters, with an option to assign the stake to a mutually agreed financial investor.

Devyani International currently operates a network of over 2,000 stores across more than 280 cities in India, Thailand, Nigeria and Nepal. Its portfolio comprises a mix of global marquee brands and homegrown concepts.

Sapphire Foods India was established in 2015 following the acquisition of KFC and Pizza Hut restaurants in India and Sri Lanka. It has since grown into one of the largest franchisees of Yum! Brands Inc in the region, operating over 700 KFC, Pizza Hut and Taco Bell restaurants across India, Sri Lanka and the Maldives.

SFIL, which closed with a loss of 3.31 per cent on the BSE on Friday, has a market capitalisation of Rs 8,055 crore, while Devyani International is valued at Rs 18,265 crore. DIL shares gained marginally by 0.14 per cent.

As part of the transaction, Devyani International has also agreed on key commercial terms with Yum! Brands. To accelerate growth and transformation of the Yum! Brands portfolio, certain waivers and enhancements have been agreed upon, aimed at strengthening long-term alignment on store expansion and sustainable growth for KFC and Pizza Hut.

DIL will additionally acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad and will pay a one-time charge towards merger approval and licence fees for the additional territory. “Yum! Brands’ approval reflects renewed confidence in Devyani International as its oldest and largest franchise partner in a priority market such as India,” the companies said in a statement.

“The continued backing and incremental investment by the RJ Corp Group reinforces its conviction in the long-term growth potential and strategic value of the merged entity,” the company said, adding that a unified brand strategy would help unlock growth for both KFC and Pizza Hut.

The merger is expected to deliver cost efficiencies through consolidated procurement and stronger bargaining power with vendors, landlords and other stakeholders. Devyani International expects annual synergies of Rs 210–225 crore from the second full year of integrated operations, with full integration likely to be completed within 15–18 months from the effective date.

Ravi Jaipuria, non-executive chairman of Devyani International, said the merger marked a decisive step in the company’s growth journey, resulting in DIL holding franchise rights across the entire Indian market for KFC and Pizza Hut. He added that the deal would also strengthen the company’s international footprint, particularly in Sri Lanka.

Sumeet Narang, nominee director of SFIL and founder of Samara Capital, said Sapphire Foods was conceived with the aim of building a scaled, institutionally strong QSR platform. “We are excited about this development, which brings together a single, unified franchisee for KFC and Pizza Hut in India,” he said.