Mumbai: Two of India’s largest quick-service restaurant (QSR) franchise operators are set to merge, bringing together the franchise rights for more than 3,000 KFC and Pizza Hut restaurants under one entity. Sapphire Foods India Limited (SFIL) will be absorbed into Devyani International Limited (DIL), creating a merged entity that will also oversee KFC and Pizza Hut’s long-term presence in India and in select overseas markets.
According to the deal, for every 100 shares of SFIL, 177 shares of DIL will be issued. A group company of DIL, Arctic International, will also acquire 18.5% of SFIL’s paid up equity share capital.
The proposed merger is subject to approval from the National Companies Law Tribunal, the Competiton Commission of India, the stock exchanges, shareholders and creditors of the companies. If all goes well, this merger will need about 15 months to complete.
“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. The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas Operations.
This combination will allow us to realize meaningful economies of scale, leverage a unified technology platform, and strengthen our supply-chain capabilities. Together, these advantages will help unlock sustained value creation and long-term growth for our shareholders, customers, employees, and partners. We are grateful to Yum! Brands and its management team for placing their confidence in DIL as the sole, long-term partner for the future growth of KFC and Pizza Hut in India and for their support of this transformative merger.” Mr. Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited, said in a press release.
This development comes at a time when in-store sales have declined, especially as customers choose to cut back on dining out due to rising costs. Intensifying competition has also played a part, as various smaller brands look to offer unique solutions to evolving customer needs.
Through this consolidation, Devyani International is expected to figure out a way to enhance its scale nationally while eliminating operational inefficiencies for both Pizza Hut and KFC. With the aim of cutting costs and improving experiences, the combined entity is expected to enhance its offerings after the operational synergies are met in the second year of operations.
