Sapphire Foods and Devyani International Merger

In a significant development in the Indian food service sector, Sapphire Foods India is merging with Devyani International, creating a formidable quick-service restaurant (QSR) giant. This merger will bring together the operations of both companies, which include well-known brands like KFC, Pizza Hut, and Taco Bell. The strategic consolidation is aimed at enhancing efficiency and positioning the new entity for accelerated growth.

Devyani International, promoted by the Jaipurias, will emerge as one of India's largest QSR operators, with a vast network of over 2,000 stores across more than 280 cities in India and abroad. This includes operations in countries like Thailand, Nigeria, and Nepal. The merger will not only strengthen their market position but also enhance their brand portfolio, combining global brands with homegrown concepts.

As part of the merger, Sapphire Foods will integrate into Devyani International via a share-swap mechanism, issuing 177 equity shares for every 100 shares held in Sapphire Foods. This transaction reflects a significant milestone for both companies and demonstrates renewed confidence from Yum! Brands in Devyani International as one of its oldest and largest franchise partners in India.

The merger is expected to yield cost efficiencies through consolidated procurement, which will provide stronger bargaining power with vendors and landlords. Devyani International anticipates annual synergies of Rs 210–225 crore from the second full year of integrated operations, with full integration projected to complete within 15–18 months.

Ravi Jaipuria, the non-executive chairman of Devyani International, highlighted that this merger marks a decisive step in the company's growth journey, giving it franchise rights across the entire Indian market for KFC and Pizza Hut. The deal is also set to enhance the company’s international presence, particularly in regions like Sri Lanka.

Moreover, Sumeet Narang, a nominee director of Sapphire Foods and founder of Samara Capital, expressed excitement about the merger, stating that it brings together a unified franchisee for KFC and Pizza Hut in India. This consolidation will not only streamline operations but also unlock new avenues for growth in the competitive QSR sector.