Devyani International Shares Surge 7%, Sapphire Foods Falls 3% On Merger Plans
Devyani International and Sapphire Foods have received board approval for their strategic merger, with Devyani shares rising 7.03% and Sapphire Foods declining 3% on the announcement. The merger involves a 177:100 share exchange ratio and includes acquisition of 19 KFC restaurants in Hyderabad, subject to regulatory approvals from various authorities including stock exchanges and Competition Commission of India.
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Devyani International shares surged 7.03% on Friday following the announcement of its strategic merger with Sapphire Foods India Ltd, while Sapphire Foods shares declined 3%. The market reaction reflects investor optimism about the consolidation of two major franchise operators in India's quick service restaurant sector.
Board Approval and Merger Structure
The boards of Devyani International Ltd and Sapphire Foods India Ltd approved a scheme of arrangement for the merger at their respective meetings held on Thursday. Under the proposed merger structure, Sapphire Foods will merge with and into Devyani International, creating a unified franchise entity for KFC and Pizza Hut brands.
| Parameter: | Details |
|---|---|
| Share Exchange Ratio: | 177 DIL shares for every 100 SFIL shares |
| Combining Entities: | Devyani International & Sapphire Foods |
| Brands Involved: | KFC and Pizza Hut |
| Additional Acquisition: | 19 KFC restaurants in Hyderabad |
Regulatory Approvals and Timeline
The proposed merger remains subject to customary regulatory and statutory approvals. These include approvals from stock exchanges, the Competition Commission of India, the National Company Law Tribunal, and shareholders and creditors of both companies. The comprehensive approval process reflects the significant scale of this consolidation in the QSR sector.
Strategic Benefits and Market Position
The merger is expected to deliver substantial synergy benefits, including the formation of one of India's largest QSR platforms with enhanced scale and national footprint, excluding captive markets. The unified brand strategy for both KFC and Pizza Hut is anticipated to unlock growth opportunities and operational efficiencies.
| Business Metric: | Current Status |
|---|---|
| Market Capitalization: | ₹16,428 crore (Mid Cap) |
| Geographic Presence: | 280+ cities across India, Nigeria, Nepal, Thailand |
| Brand Portfolio: | KFC, Pizza Hut, Costa Coffee, Vaango, others |
| Recent Acquisition: | Sky Gate Hospitality (Biryani By Kilo, Goila Butter Chicken) |
Devyani International operates as the largest franchisee for Yum Brands' QSR chains in India and serves as the sole franchisee for Costa Coffee, Tea Live, New York Fries and Sanook Kitchen. The company also owns the South Indian vegetarian food QSR chain Vaango, demonstrating its diversified portfolio approach in the competitive restaurant market.
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