Sapphire Foods India Limited, the operator of KFC and Pizza Hut, is poised to merge with Devyani International Limited, which also manages QSR chains in India, as announced in a statement on Thursday, January 1.
This strategic move consolidates two of the leading QSR chain operators in India, collectively managing approximately 3,000 stores, thereby strengthening Yum Brands’ presence in the region.
In the arrangement, shareholders of Sapphire will receive 177 shares of Devyani International for every 100 shares they own, resulting in an exchange ratio of 1.77 Devyani shares per Sapphire share. Following the merger’s completion, Sapphire Foods will be dissolved without winding up.
As detailed in an exchange filing, the planned scheme of arrangement will see Sapphire Foods amalgamated into Devyani International, with April 1, 2026, designated as the appointed date. The merger will proceed after receiving approvals from shareholders, regulators, stock exchanges, and the National Company Law Tribunal.
This transaction unites most KFC and Pizza Hut outlets in India under a single publicly listed entity, excluding those situated in airports and railway stations. Devyani International also oversees various other food and beverage brands in India and abroad, such as Costa Coffee and several indigenous concepts.
As part of the transaction, Sapphire Foods Mauritius, a promoter entity, will divest approximately 18.5 percent of its stake in Sapphire to Arctic International, a company within the Devyani group. Arctic has the option to pass this stake to a financial investor.
The board has also sanctioned a binding term sheet with Yum India to revise the development and commercial terms for KFC and Pizza Hut post-merger.
Upon completion of the merger, Sapphire’s promoters will be reclassified as public shareholders of Devyani International. Additionally, Sapphire Foods has approved relocating its registered office from Maharashtra to Haryana, pending statutory approvals.
The companies anticipate that the merger will yield scale advantages, operational efficiencies, and improved capital access as competition escalates in India’s rapidly growing fast-food sector.
Financial results indicate that both organizations are currently operating at a loss. For the September 2025 quarter, Devyani International Limited reported a net loss of ₹23.9 crore, while Sapphire Foods India Limited saw a loss of ₹12.8 crore in the same timeframe. Analysts observing the sector suggest that although there are short-term losses, the combined scale could lead to significant cost synergies unattainable by either entity independently.
Currently, Devyani manages 2,184 outlets across its various brands, while Sapphire operates about 1,000 restaurants. This merged network would rank among the largest quick service restaurant platforms in the nation, potentially providing the combined entity enhanced bargaining power over store rentals, supply chains, logistics, and procurement expenses.
