India’s KFC and Pizza Hut Operators Sapphire Foods and Devyani International to Merge in $934 Million Deal

Sapphire Foods and Devyani International, both franchisees of KFC and Pizza Hut in India, have announced a $934 million merger to create one of the largest quick service restaurant entities in the country. 

Merger Between Sapphire Foods and Devyani International 

Sapphire Foods and Devyani International, major franchise operators of Yum Brands-owned KFC and Pizza Hut in India, confirmed their $934 million merger. The move combines their portfolios of over 3,000 outlets operating across India and overseas. As per the announced swap ratio, Devyani International will issue 177 shares for every 100 shares of Sapphire Foods. 

The merger aims to achieve synergy benefits of ₹2,100 crore to ₹2,250 crore from the second full year of the combined operations. Both companies currently operate under margin pressure with rising costs and reduced same-store sales growth, reflecting a trend of decreased consumer spending on non-essential services. 

Financial Performance of the Entities 

In the quarter ending September 30, 2023, Sapphire Foods reported total consolidated costs rising 10% year-on-year to ₹7,68,00,00,000, while Devyani’s costs increased by 14.4% to ₹14,08,00,00,000.  

Devyani registered a consolidated net loss of ₹21.9 crore compared to a profit of ₹1.7 lakh in the previous year. Sapphire Foods reported a wider net loss of ₹12.77 crore versus ₹3.04 crore in the same period the previous year. 

Both entities compete with Domino’s operator Jubilant FoodWorks and McDonald’s operator Westlife Foodworld, which have maintained strong consumer recognition nationwide. 

Read More: Vodafone Idea Share Price Rises 8%; Amends Implementation Agreement With Vodafone Group To Recover CLAM Dues! 

Combined Entity to Optimise Operations 

Bringing the operations under a single umbrella is expected to enhance cost efficiency, unify operations, and improve overall scalability. With the combined outlet strength, the merged entity strengthens its market footprint in the QSR space, focusing on both dine-in and delivery formats. 

Conclusion 

The $934 million merger of Sapphire Foods and Devyani International brings together KFC and Pizza Hut operations under one roof, aiming to optimise resource use and cost control amid increasing competition and operational challenges in India’s fast-food segment. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.