Devyani and Sapphire Foods to merge, combining Yum! Brands franchises in India

Shares of Devyani International rose as much as 5.3% after it announced plans to merge with rival franchisee Sapphire Foods India, which operates KFC and Pizza Hut outlets in the region. The deal would combine two of Yum! Brands' largest franchise partners in India into a single operator for KFC and Pizza Hut.

Devyani did not confirm the size of the transaction; Reuters reported the dealvalued at $934 million. Under the merger terms, Devyani will issue 117 shares for every 100 equity shares of Sapphire Foods India. Shares of Sapphire fell as much as 6.4% at the open. The companies said the merger is expected to take effect within 12 to 15 months, subject to regulatory and shareholder approvals.

They said the move would accelerate KFC's expansion in India and help revitalize Pizza Hut, which trails market leader Domino's. Yum! Brands CFO Ranjith Roy said, "India is a high-priority market for us," adding the country "has abundant room for further growth." He said the proposed merger would drive accelerated expansion and create "greater value for both shareholder bases" through improved supply chain operations.

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 the merger is completed. Devyani operates more than 2,000 quick-service restaurant outlets across more than 280 cities in India, Nigeria, Nepal and Thailand.

Key Topics

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