Devyani Shares Jump After Merger With Sapphire

Shares of Devyani International, the Indian operator of KFC and Pizza Hut, rose up to 5.3% after the company announced plans to merge with rival franchisee Sapphire Foods India.

Yum! Brands, the global company behind KFC, Pizza Hut, and Taco Bell, runs its restaurants in India through franchise partners such as Devyani International, Sapphire Foods India, and Burman Hospitality. With this merger, two of Yum! Brands’ biggest franchise partners in India will come together under one company.

Although Devyani did not officially share the deal value, a Reuters report said the merger is worth around $934 million. As part of the deal, Devyani will issue 117 shares for every 100 shares of Sapphire Foods India.

After the announcement, shares of Sapphire Foods India fell by as much as 6.4% in early trading.

The merger is expected to be completed within 12 to 15 months, pending approval from regulators and shareholders. The companies said the deal will help accelerate KFC’s growth in India and enhance Pizza Hut’s performance, which currently lags behind market leader Domino’s.

Yum! Brands’ Chief Financial Officer, Ranjith Roy, said India is a very important market with huge growth potential. He added that the merger will help create more value for shareholders by improving supply chain operations.

Devyani International, the largest Yum! Brands franchisee in India, expects annual cost savings and benefits of ₹2.1–2.2 billion starting from the second year after the merger.

Devyani currently operates over 2,000 fast-food outlets across India, Nigeria, Nepal, and Thailand. Sapphire Foods runs hundreds of KFC and Pizza Hut outlets in India and Sri Lanka and is the largest international fast-food chain in Sri Lanka.

Industry experts believe India could become one of Yum! Brands’ most important global markets. India already has the third-largest number of Yum! Brands restaurants, after the US and China.