Devyani, Sapphire to merge and create single franchisee for Pizza Hut & KFC

Devyani International will absorb Sapphire Foods under a share-swap merger to create a single Yum! India franchisee for KFC and Pizza Hut

As we enter 2026, the board of directors of Devyani International Ltd (DIL) and Sapphire Foods India Ltd (SFIL) on Thursday approved the merger of the latter into Devyani, creating a single unified Yum! India franchise for KFC and Pizza Hut.

 

The proposed merger, subject to approvals, will be carried out through a share-swap ratio under which DIL will issue 177 shares for every 100 shares of SFIL. As part of the acquisition, DIL will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad.

 

Arctic International, a group company, is to acquire approximately 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.

 

 

It will also pay a one-time fee to Yum! India towards merger approval and licence for additional territories.

 

What does Yum! India say about the merger?

 

"Devyani International and Sapphire Foods India 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," Ranjith Roy, chief financial officer, Yum! Brands said in a release.

 

"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," he added.

 

How long will the merger take?

 

The completion, expected to take 12–15 months, "will result in DIL becoming one of the largest quick-service restaurant (QSR) operators in India by combining the operations of both companies, positioning the merged entity for the next phase of accelerated growth, scale, and profitability," stated a release by DIL.

 

DIL expects overall synergies of Rs 210–225 crore on an annual basis from the second full year of operations of the integrated company.

 

Why consolidate now?

 

The move comes amid a sustained slowdown in the country’s QSR market. The merged entity will focus on accelerating expansion of KFC, strengthening and revitalising Pizza Hut for long-term sustainable growth, while scaling growth of the DIL emerging brands portfolio.

 

How large will the combined entity be?

 

As of March 31, 2025, DIL operated 2,039 stores in total, recording revenue of Rs 4,951 crore. Meanwhile, SFIL operated 963 stores, clocking revenue of Rs 2,875 crore in the same period.

 

What do promoters and investors say?

 

“The consolidation of DIL and SFIL marks a significant milestone and a decisive leap forward in our growth journey, resulting in DIL holding franchise rights across the entire Indian market for KFC and Pizza Hut brands," said Ravi Jaipuria, non-executive chairman, Devyani International.

 

The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations, he added.

 

What are investor expectations?

 

“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,” Sumeet Narang, nominee director of Sapphire Foods and founder of Samara Capital said in the release.

 

“We are confident that, under RJ Corp’s leadership, these iconic brands will continue to grow from strength to strength in the years ahead. India has the potential to become a true crown jewel within Yum!’s global markets, and this announcement represents a significant step in that journey,” he added.