Devyani and Sapphire to merge Indian KFC and Pizza Hut operations; shares react

Shares of Devyani International rose as much as 5.3% after the company announced plans to merge with rival franchisee Sapphire Foods India, while Sapphire's shares fell as much as 6.4% at the open. The deal would combine the two major franchise operators for Yum! Brands in India and place KFC and Pizza Hut operations under a single entity.

Under the merger terms, Devyani will issue 117 shares for every 100 equity shares of Sapphire. Devyani did not confirm the deal size; Reuters reported the transaction is valued at $934 million. The companies said the merger is expected to take effect within 12 to 15 months, subject to regulatory and shareholder approval.

Yum! Brands CFO Ranjith Roy said, "India is a high-priority market for us," and added the country has abundant room for further growth. The firms said the combination would accelerate KFC's expansion and help revitalize Pizza Hut, which trails market leader Domino's. Devyani expects annual synergies of 2.1 billion to 2.2 billion rupees (about $23 million to $25 million) starting from the second full year after completion of the merger.

Devyani operates more than 2,000 quick-service restaurants across over 280 cities in India and in Nigeria, Nepal and Thailand. Sapphire runs 529 KFC and 338 Pizza Hut restaurants in India, plus 119 Pizza Hut and 11 Taco Bell restaurants in Sri Lanka.

Key Topics

Business, Yum Brands, Merger, India, Kfc, Pizza Hut, Fast Food