CNBC-TV18 Newsbreak Confirmed: KFC, Pizza Hut operator Sapphire to Merge into Devyani at 1:1.77 swap ratio

KFC

and Pizza Hut operator Sapphire Foods India Limitedis set to merge into Devyani International Limited which also operates the QSR chains in the country, the company said in a statement on Thursday, January 1.

The move consolidates two of the largest QSR chain operators in India, running about 3,000 stores and would anchor Yum Brands' presence in the country.

CNBC-TV18 had reported that the QSR chain operating companies were in advanced stage of talks with swap ratio being a key hurdle, on December 4.

Also read: (https://www.cnbctv18.com/market/devyani-sapphire-merger-talks-enter-advanced-stage-swap-ratio-emerges-as-key-hurdle-19780782.htm/amp)

As part of the deal, Sapphire shareholders will receive 177 shares of Devyani International for every 100 shares they hold, translating to an exchange ratio of 1.77 Devyani shares for each Sapphire share. Once the merger becomes effective, Sapphire Foods will be dissolved without winding up.

According to an exchange filing, under the proposed scheme of arrangement, Sapphire Foods will be amalgamated into Devyani International, with April 1, 2026 fixed as the appointed date. The merger will take effect after approvals from shareholders, regulators, stock exchanges and the National Company Law Tribunal.

The transaction brings most of the KFC and Pizza Hut restaurants in India under a single listed company, excluding outlets located at airports and railway stations. Devyani International also operates other food and beverage brands in India and overseas, including Costa Coffee and several homegrown concepts.

The merger combines Sapphire’s strong presence in western and southern India and Sri Lanka with Devyani’s pan-India network and international operations across Nepal, Nigeria and Thailand, creating a larger platform with a wider geographic footprint.

Also read: Devyani International Q2 Results: Net loss at ₹22 crore; revenue rises 13%

As part of the transaction structure, Sapphire Foods Mauritius, a promoter entity, will sell around 18.5 percent stake in Sapphire to Arctic International, a Devyani group company. Arctic has the option to transfer this stake to a financial investor.

The board has also approved a binding term sheet with Yum India to revise development and commercial terms for KFC and Pizza Hut following the merger.

Post-merger, Sapphire’s promoters will be reclassified as public shareholders of Devyani International. Separately, Sapphire Foods has approved shifting its registered office from Maharashtra to Haryana, subject to statutory approvals.

The companies said the merger is expected to deliver scale benefits, operational efficiencies and stronger access to capital as competition intensifies in India’s fast-growing fast-food market.

Financial disclosures show that both companies continue to operate in the red. Devyani International Limited reported a net loss of ₹23.9 crore for the September 2025 quarter, while Sapphire Foods India Limited posted a loss of ₹12.8 crore in the same period. Analysts tracking the sector say that despite near-term losses, the combined scale of the two businesses could unlock meaningful cost synergies that neither company can fully achieve on its own.

Operationally, Devyani runs 2,184 outlets across its brands, while Sapphire operates around 1,000 restaurants. A merged network of this size would rank among the largest quick service restaurant platforms in the country, potentially giving the combined entity stronger bargaining power on store rentals, supply chains, logistics and procurement costs.