Devyani International and Sapphire Foods India Limited have announced a transformative merger that will create one of India's largest food and beverage platforms. The boards of both companies approved the merger on January 1, 2026, marking a significant milestone in India's quick service restaurant sector.

Merger Structure and Financial Impact

The transaction involves a comprehensive share swap arrangement with specific terms for different stakeholder groups:

The merger includes a promoter-level transaction where RJ Corp will acquire 18.5% stake from Sapphire Foods Mauritius Limited at a floor price of ₹280 per share. This bilateral arrangement, to be completed within 3-15 months, ensures RJ Corp maintains significant shareholding in the combined entity as required by Yum! Brands.

Expected Synergies and Timeline

The companies have identified substantial cost synergies expected from the merger:

These synergies will emerge from general and administrative cost optimization, enhanced Yum! incentives, improved procurement negotiations, and operational efficiencies. The figures represent net benefits after accounting for integration costs and new functional responsibilities.

Operational Transformation and Brand Management

The merger will significantly alter operational responsibilities between the franchisee and Yum! Brands. Devyani International will assume expanded roles across both major brands:

Pizza Hut Operations:

• Marketing and innovation functions transfer to merged entity
• Technology and supply chain management responsibilities
• 10-year incentive structure for brand turnaround
• Flexibility to restructure store portfolio without net unit reduction requirements

KFC Operations:

• Technology and supply chain management transfer
• Marketing and innovation remain with Yum! Brands
• Continued expansion under existing development agreements

The company has already initiated capability building, hiring functional leaders and shortlisting a global technology partner to support the transformation. Management expects to have all new capabilities operational by June 2026, well before merger completion.

Strategic Market Positioning

The combined entity will operate in India's rapidly expanding food services market, estimated at over $100 billion, with the QSR segment alone exceeding $25 billion. The merger creates a unified franchise partner with national reach, enhanced bargaining power with landlords and suppliers, and improved capital allocation capabilities.

The merged platform will house multiple brand portfolios including KFC, Pizza Hut, Costa Coffee, Vaango, Biryani By Kilo, and other regional brands, providing comprehensive coverage across different consumer segments and dining formats.

Pizza Hut Revival Strategy

Management outlined specific plans for Pizza Hut's turnaround, targeting positive brand contribution margins in the first year and low double-digit margins thereafter. The strategy focuses on:

• Store portfolio optimization with closure and relocation flexibility
• Same-store sales growth recovery through unified marketing approach
• Technology infrastructure enhancement for improved delivery capabilities
• Innovation initiatives under direct franchisee control

The 10-year incentive structure from Yum! Brands provides long-term support for the brand revival efforts, reflecting mutual commitment to Pizza Hut's success in the Indian market.

Technology and Infrastructure Development

The merged entity will implement a unified technology platform across all brands, featuring common backend infrastructure with brand-specific consumer interfaces. This approach will enable faster delivery times, improved customer experience, and operational efficiencies while maintaining distinct brand identities.

The companies expect the merger to position them competitively against market leaders through enhanced speed of service, innovation capabilities, and national-scale execution. The transaction represents a strategic consolidation in India's fragmented QSR market, creating a platform capable of capturing the sector's significant growth potential.

Devyani International , one of the country's leading quick service operators, announced that its subsidiary Sky Gate Hospitality has sold its stake in Peanut Butter and Jelly Ltd to Heritage Foods. The transaction involves the complete divestment of Sky Gate's ownership in the health-focused ice cream brand owner.

Transaction Details

The divestment was executed through a Share Purchase Agreement between Sky Gate Hospitality and Heritage Foods. The key parameters of the transaction are outlined below:

Peanut Butter and Jelly Pvt Ltd owns the health-focused 'Get-A-Whey' brand, which specializes in producing high-protein, no-added-sugar ice creams and desserts. The brand caters to the growing health-conscious consumer segment in the frozen dessert market.

Impact on Corporate Structure

Following the completion of the share purchase agreement, Peanut Butter and Jelly Ltd has ceased to be a subsidiary of Sky Gate Hospitality and a step-down subsidiary of Devyani International with immediate effect. This marks a complete exit from the health-focused ice cream segment for the quick service restaurant operator.

Recent Corporate Developments

Devyani International had acquired Sky Gate Hospitality last year, bringing popular food brands under its umbrella including:

• Biryani By Kilo
• Goila Butter Chicken

Last week, Devyani International, part of the Jaipuria family-promoted RJ Corp Group, announced a significant merger with Sapphire Foods through a share swap arrangement. The scheme of merger requires mandatory regulatory clearance before implementation.

Strategic Positioning

Once the merger with Sapphire Foods receives approval, the combined entity will become one of the largest quick service restaurant chains with potential to cross USD 1 billion in revenue. Both Sapphire Foods and Devyani International operate as franchise partners for Yum! Brands' restaurant chains, including KFC and Pizza Hut, strengthening their position in the Indian QSR market.