Sapphire–Devyani merger to form unified Yum! Brands franchise for KFC, Pizza Hut

Sapphire Foods India Ltd will merge with Devyani International Ltd to create a single unified franchisee for KFC and Pizza Hut in India, following board approvals by both companies on Thursday.

The boards of Devyani International Ltd and Sapphire Foods India Ltd, at their respective meetings held on Thursday, approved a scheme of arrangement for the merger of Sapphire Foods with and into Devyani International. The transaction will be carried out through a share-swap arrangement.

“The strategic consolidation will create a single unified Yum! India franchisee for KFC and Pizza Hut,” the companies said in a late-night joint statement.

The proposed merger is subject to receipt of customary regulatory and statutory approvals, including approvals from the stock exchanges, the Competition Commission of India, the National Company Law Tribunal(s), as well as shareholders and creditors of both companies.

“The process of obtaining these approvals is expected to take approximately 12 to 15 months, following which the merger will become effective,” the statement said. Upon completion, Devyani International will combine the operations of both companies, positioning the merged entity for the next phase of growth, scale and profitability.

Under the scheme of arrangement, 177 equity shares of Devyani International will be issued for every 100 equity shares of Sapphire Foods.

In addition, Arctic International, a Devyani International group company, will acquire around 18.5 per cent of Sapphire Foods’ paid-up equity share capital from the existing promoters, with an option to assign the stake to a mutually agreed financial investor.

The merger has received approval from Yum! Brands, the US-based owner of KFC and Pizza Hut.

Separately, Devyani International will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. These outlets were opened when the company was expanding its footprint in India. Devyani International will also pay a one-time charge to Yum! India towards merger approval and licence fees for the additional territory.

Yum! Brands operates in India with three quick service restaurant brands — KFC, Pizza Hut and Taco Bell. It also owns Habit Burger and Grill, among others.

The companies said the merger is expected to generate operational synergies, including the creation of one of the largest QSR platforms in India with an expanded national footprint, excluding captive markets. A unified brand strategy for KFC and Pizza Hut is also expected to support growth.

“DIL is expecting an overall synergy of Rs 210 to 225 crore on an annual basis from the second full year of operations of the integrated company,” the statement said.

Last year, Devyani International acquired Sky Gate Hospitality, which owns brands including Biryani By Kilo and Goila Butter Chicken.

Commenting on the merger, Devyani International’s non-executive chairman Ravi Jaipuria said, “The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations.”

“This combination will allow DIL 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,” he said.

Devyani International is the largest franchisee of Yum! Brands’ KFC and Pizza Hut chains in India. It is also the sole franchisee for Costa Coffee, Tea Live, New York Fries and Sanook Kitchen in India, and owns the South Indian vegetarian QSR chain Vaango.

The company operates stores across more than 280 cities in India, Nigeria, Nepal and Thailand as of September 30, 2025.

Sumeet Narang, nominee director of Sapphire Foods and founder of Samara Capital, said: “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 Limited. This transaction reflects the shared long-term vision and strong partnership between Samara Capital Group and RJ Corp.”

Yum! Brands CFO Ranjith Roy said, “DIL and SFIL have been outstanding partners to Yum! for many years. 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, leading to a stronger, more resilient partner in India.”

Sapphire Foods holds franchise rights to operate KFC outlets in 10 states and Pizza Hut outlets in 11 states. It also operates KFC, Pizza Hut and Taco Bell restaurants in Sri Lanka through its subsidiaries, with over 1,000 restaurants across India and Sri Lanka.