KFC, Pizza Hut Under One Roof: Sapphire Foods To Merge With Devyani In 2026's First M&A Deal

Sapphire Foods India Ltd. and Devyani International Ltd. announced on Thursday a merger that will consolidate India's fast-expanding quick service restaurant sector.

The scheme of arrangement for the merger of Sapphire with and into Devyani was approved by the board, as per a stock exchange filing. The deal will bring KFC, Pizza Hut and other Yum! brands chains under one roof.

The proposed arrangement involves a swap ratio wherein Sapphire shareholders will receive 177 Devyani shares for every 100 Sapphire shares held, as per the approved swap ratio.

The board also approved a secondary sale of 18.5% stake in Sapphire Foods to Devyani's promoter entity, Arctic International, which will be conducted before the merger.

However, the proposed merger is subject to receipt of all the customary regulatory and statutory approvals. This includes approvals from the stock exchanges, the Competition Commission of India, the National Company Law Tribunal and the shareholders and creditors of both the companies.

Once the merger is approved, the entity will undertake a host of measures including accelerated expansion of KFC, strengthening and revitalisation of Pizza Hut for long-term sustainable growth, and scaled growth of the DIL emerging brands portfolio.

As part of KFC's expansion, DIL will acquire 19 KFC restaurants currently operated by Yum! India in Hyderabad and pay a one-time charge to Yum! India towards merger approval and the licence fee for the additional territory.

"The full integration of the two entities, along with the realization of the identified synergy benefits, is expected to be completed within 15 to 18 months from the effective date of the merger," the press release stated.

DIL is expecting an overall synergy of Rs 210-225 crore on an annual basis from second full-year operations of integrated company.

"The consolidation of Devyani International Limited and Sapphire Foods India Limited marks a significant milestone and a decisive leap forward in our growth journey, resulting in DIL holding franchise rights across the entire Indian market for KFC and Pizza Hut brands," DIL Non-Executive Chairperson Ravi Jaipuria.

The merger will strengthen its international presence in Sri Lanka and complement their existing overseas operations, the release added.

Shares of DIL ended 0.35% lower at Rs 147.43 apiece, while those of Sapphire Foods ended 2.20% higher at Rs 262.70 apiece on the NSE on Thursday. This compares to a 0.06% advance in the Nifty index.