Devyani International rises after board OKs merger proposal with Sapphire Foods

Devyani International (DIL) added 1.39% to Rs 150 after the company's board and that of Sapphire Foods India (SFIL) approved a scheme of arrangement for the merger of SFIL with and into DIL, marking a strategic consolidation of the two companies.

Following this announcement, shares of Sapphire Foods India fell 2.35% to currently trade at Rs 255.20 on the BSE.

In a statement filed with the bourses yesterday, DIL stated that the proposed merger is subject to receipt of all the customary regulatory & statutory approvals, including approvals from the stock exchanges, the Competition Commission of India, the National Company Law Tribunals, and the shareholders and creditors of both the companies.

 

The process of obtaining these approvals is expected to take approximately 12 to 15 months, following which the merger will become effective.

Upon completion, the transaction 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, the company said in a statement.

The merger of SFIL with DIL is structured through a share-swap mechanism.

DIL will issue 177 equity shares of DIL for every 100 equity shares of SFIL.

As part of the deal, group company Arctic International will acquire approximately 18.5% of SFILs paid-up equity share capital from the existing SFIL promoters, with an option to assign to a mutually agreed financial investor.

The merged entity will focus on accelerated expansion of KFC as well as strengthening and revitalization of Pizza Hut for long-term sustainable growth.

Yum! Brands has granted its approval for the consolidation of DIL and SFIL, it added.

DIL will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad. It will pay a one-time charge to Yum! India towards merger approval and the licence fee for the additional territory.

DIL further said that it is expecting an overall synergy of Rs 210 to 225 crore on an annual basis from 2nd full year operations of integrated company.

The full integration of the two entities, along with the realization of the identified synergy benefits, is expected to be completed within 15 to 18 months from the effective date of the merger.

Ravi Jaipuria, non-executive chairman of Devyani International, said: The consolidation of Devyani International and Sapphire Foods India 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.

The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations. This combination will allow us to realize meaningful economies of scale, leverage a unified technology platform, and strengthen our supply-chain capabilities."

Devyani International (DIL) is the largest franchisee of Yum Brands in India and one of the countrys leading quick service restaurant (QSR) operators. The company also operates Costa Coffee outlets across India under a franchise agreement.

The company reported a consolidated net loss of Rs 21.89 crore in Q2 FY26 as against a consolidated net profit of Rs 0.02 crore during the previous quarter ended September 2024. Sales rose 12.65% to Rs 1376.75 crore in Q2 FY26 over Q2 FY25.

Powered by Capital Market - Live News