Sapphire Foods-Devyani International Merger: How Many Shares Will Investors Receive?

Synopsis: Devyani International Limited (DIL) and Sapphire Foods India Limited (SFIL) have approved a merger under a Scheme of Arrangement whereby SFIL will be amalgamated into DIL, subject to regulatory and shareholder approvals.

Two of India’s biggest quick service restaurant players, Devyani International and Sapphire Foods, are coming together to form a single company. Both businesses run well-known brands like KFC and Pizza Hut across the country, and this merger brings their operations under one roof. By joining hands, they aim to build a larger and stronger restaurant network in India, with better scale, smoother operations, and more room to grow in the coming years.

With the market capitalization of Rs.18,549 Crores, the shares of DIL has reached intraday high of Rs. 159.6 per share, raising nearly 8  percent from its previous day close of Rs. 147.43 per share whereas  the shares of SFIL has plunged to intraday low of Rs. 247.1 per share, falling nearly 5.7  percent from its previous day close of Rs. 262.7 per share and having a market capitalization of Rs. 8,264 Crores

Devyani International Limited (DIL) and Sapphire Foods India Limited (SFIL) have agreed to merge, with SFIL being combined into DIL. This merger will take place after getting the necessary approvals from shareholders, creditors, stock exchanges, and regulators. The plan is for the merger to take effect from April 1, 2026, and it is expected to be completed over 12 to 15 months. Once the merger is completed, SFIL will be dissolved, and DIL will continue as the combined company.

The merger will happen through a share swap. Shareholders of SFIL will get 177 shares of DIL (Rs. 1 each) for every 100 shares of SFIL (Rs.2 each). Before the merger is finalized, SFIL promoters will transfer around 18.5% of SFIL’s shares to Arctic International Private Limited, a DIL group company. They may also assign this stake to a financial investor. The remaining SFIL promoter shares will be converted into DIL shares. After the merger, the former SFIL promoters will become public shareholders of DIL.

Impact of Merger

The proposed merger is expected to create one of the largest quick-service restaurant (QSR) platforms in India, giving the combined company a wider national presence. By aligning brand strategies for KFC and Pizza Hut, the merger aims to unlock growth opportunities for both brands. The combined scale is also likely to bring cost efficiencies through better procurement, stronger negotiating power with vendors and landlords, and other operational benefits. Integrating financial, managerial, and technical capabilities will help improve execution, governance, and competitive positioning. 

The merger is expected to enhance profitability through productivity gains, optimized overheads, and scale benefits, while also strengthening the balance sheet by improving cash flow and providing easier access to funding for expansion. DIL expects total synergies of around Rs. 210 to 225 crores annually from the second year of operations. The full integration and realization of these benefits is expected to take around 15 to 18 months from the merger’s effective date.

About the companies

Devyani International Limited is one of India’s largest quick service restaurant companies, with more than 2,000 stores across 280 cities in India and a presence in countries like Thailand, Nigeria, and Nepal. It is the biggest franchise partner of Yum! Brands in India and Nepal and also runs well-known global brands such as Costa Coffee and New York Fries. Along with these, the company has its own Indian brands like Vaango and The Food Street. It has also expanded its Indian food offerings by acquiring Sky Gate Hospitality, which owns popular brands like Biryani By Kilo and Goila Butter Chicken.

Sapphire Foods India Limited started in 2015 after taking over KFC and Pizza Hut restaurants in India and Sri Lanka. Since then, it has grown into a major operator of these brands. The company runs restaurants in different formats like dine-in, takeaway, and online delivery. In India, it operates KFC outlets in 10 states and Pizza Hut outlets in 11 states. It also runs restaurants in Sri Lanka through its subsidiaries, and together across India and Sri Lanka, the company operates over 1,000 restaurants. 

Overall, this merger brings Devyani International and Sapphire Foods together to form a much larger and stronger restaurant business. By running brands like KFC and Pizza Hut under one company, the merged entity can work more smoothly, reduce costs, and grow faster across India and nearby markets. With a wider store network, relative synergy, the combined business is better placed to improve performance and focus on steady, long-term growth.

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