Shares of Sapphire Foods and Devyani International are in focus after both companies approved a long-awaited merger. These two companies are the main franchise partners of Yum Brands in India. The merger announcement was made after market hours on Thursday, so both stocks are expected to react when markets open on Friday, January 2.
As per the approved share swap arrangement, shareholders of Sapphire Foods will receive 177 shares of Devyani International for every 100 shares they hold. Based on current market prices, Devyani shares are trading near ₹147 and Sapphire shares around ₹261. This means the deal value is broadly in line with current market prices.
The merger will come into effect from April 1, 2026, once all required approvals from regulators and shareholders are received. After the merger, Sapphire Foods will be dissolved without liquidation, and all its business operations will move under Devyani International.
As part of the deal, Devyani International will also take over 19 KFC restaurants in Hyderabad that are currently run directly by Yum Brands. However, outlets located at airports and railway stations will not be included in the merger.
The main objective of the merger is to bring KFC and Pizza Hut businesses under one listed company. This is expected to help the combined entity reduce costs, improve efficiency, and benefit from a larger scale of operations.
Separately, Sapphire Foods Mauritius plans to sell about 5.95 crore shares, equal to an 18.5 percent stake, to Arctic International. Arctic International is part of the Devyani Group, which will increase promoter-level consolidation ahead of the merger.
The merger is considered positive for Devyani International. Analysts expect revenue and cost synergies due to the removal of overlapping operations. The larger scale should also improve operating leverage and support better profitability over time.
Based on FY25 proforma numbers, the combined company will operate about 3,002 stores, compared to 2,039 stores for Devyani and 963 for Sapphire earlier. Combined revenue is estimated at ₹7,826 crore, while operating EBITDA is expected to be around ₹756 crore. EBITDA margins for the combined entity are estimated at 9.7 percent.
Post-merger, Devyani’s revenue is expected to rise by 58 percent and EBITDA by 53 percent, while its equity base will increase by 46 percent.
Investors will closely track improvements in store-level performance, cost efficiency, expansion plans, and changes in revenue mix across brands, formats, and regions.
On Thursday, shares of Sapphire Foods rose 2.70 percent to ₹264, while Devyani International shares fell 1.52 percent to ₹145.70.
