Devyani International is expecting an overall synergy of Rs 210 to 225 crore on an annual basis from second full year operations of integrated company
Aimed at creating the country’s largest quick-service restaurant (QSR) entity, Devyani International and Sapphire Foods India, which operate KFC and Pizza Hut in India are merging their operations, the two companies informed through the stock exchange filings.
The process of obtaining the approvals is expected to take approximately 12 to 15 months, following which the merger will become effective. The full integration of the two entities, along with the realisation of the identified synergy benefits, is expected to be completed within 15 to 18 months from the effective date of the merger.
“Pursuant to the scheme, with effect from the appointed Date (defined in the scheme as opening hours of 1 April 2026), the transferor company (Sapphire Foods India) shall stand amalgamated with and absorbed into the transferee company (Devyani International),” the companies noted in the exchange filing.
Upon the scheme becoming effective and in consideration of the amalgamation, Devyani International (DIL) will issue and allot 177 fully paid up equity shares of Rs 1 each for every 100 fully paid up equity shares of Rs 2 each held by shareholders of Sapphire Foods India. The Board of Directors of the company has also approved the execution, delivery and performance of a Merger Framework Agreement (MFA).
Strategic Focus Of Merger
The companies note that the key objectives of the merger of operations involve accelerating expansion of KFC, strengthening and revitalising Pizza Hut for long-term sustainable growth and Scaled growth of the DIL emerging brands portfolio.
Merger of SFIL with and into DIL is through a share-swap mechanism. Arctic International, a group company, will acquire approximately 18.5 per cent of SFIL’s paid up equity share capital from the existing SFIL promoters, with an option to assign to a mutually agreed financial investor.
Noting that the merger marks a significant milestone and a decisive leap in the company’s growth journey, Ravi Jaipuria, Non-Executive Chairman of DIL added, “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.”
Expected Synergy Benefits
Companies pointed out that unified brand strategy and consumer proposition will help unlock growth for both KFC and Pizza Hut. It will also help in economies of scale, with cost efficiencies through consolidated procurement and stronger negotiating leverage with vendors, landlords and other key stakeholders.
Integration of financial, managerial and technical capabilities will strengthen execution, governance, and competitive positioning. It will result in enhanced financial flexibility and cash flow generation to support accelerated expansion and access to funding at better terms, it added.
“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. We are extremely excited about this development, which brings together a single, unified franchisee for KFC and Pizza Hut in India through the merger with Devyani International,” noted Sumeet Narang, SFML nominee director, SFIL and Founder, Samara Capital.
Key Commercial Terms
Yum! Brands has granted its approval for the consolidation. As part of this approval, DIL has agreed on few key commercial terms, which involve long-term and well aligned enhancement of certain waivers for Pizza Hut and KFC brands from Yum! Brands.
DIL will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. DIL will pay a one-time charge to Yum! India towards merger approval and the license fee for the additional territory. The continued backing and incremental investment by the RJ Corp Group further reinforces its strong conviction in the long-term growth potential and strategic value of the merged entity in India, the statement noted.
“DIL and SFIL have been outstanding partners to Yum! for many years. India is a high-priority market for us with an abundance of white space for further growth and strong consumer reception for our brands. We are pleased to support this proposed merger to unlock a new phase of accelerated growth in the region and to advance supply chain operations,” highlighted Ranjith Roy, Chief Financial Officer (CFO), Yum! Brands.
A Vast Network
DIL has a network of over 2,000 stores across more than 280 cities in India, Thailand, Nigeria, and Nepal. It is the sole franchisee in India for several international brands, including Costa Coffee, Tea Live, New York Fries, and Sanook Kitchen. Complementing its global portfolio, DIL has developed strong indigenous brands such as Vaango, a south Indian vegetarian cuisine concept, and The Food Street, a food court format.
On the other hand, SFIL operates restaurants across multiple formats, including dine-in, takeaway, and online delivery, catering to a wide and diverse consumer base. In India, the Company holds franchise rights to operate KFC outlets in ten states and Pizza Hut outlets in 11 states.
Internationally, SFIL operates through its subsidiaries in Sri Lanka, where it manages a large and growing footprint of KFC, Pizza Hut, and Taco Bell restaurants. Across its India and Sri Lanka operations, SFIL operates over 1,000 restaurants
