Devyani-Sapphire Merger: Building India's $1 Billion F&B Powerhouse

Devyani International and Sapphire Foods are merging to form India's largest quick-service restaurant (QSR) operator, targeting over $1 billion in annual revenue by completion. Announced on January 1, 2026, this all-share swap deal consolidates KFC and Pizza Hut franchises under one roof, as highlighted by Ravi Jaipuria, Devyani's non-executive chairman, during a January 6 analyst call.financialexpress?

Merger Timeline and Structure
Sapphire Foods merges into Devyani with a 177:100 share swap ratio—shareholders receive 177 Devyani shares (?1 each) for every 100 Sapphire shares (?2 each). The appointed date is April 1, 2026, with full completion expected in 12-15 months pending NCLT, shareholder, and regulatory approvals, potentially by mid-2027. Arctic International, a Devyani group entity, will acquire ~18.5% of Sapphire from promoters at a ?280 floor price over 3-15 months.

Strategic Synergies
The combined entity eyes ?210-225 crore in annual synergies from year two, net of integration costs, via unified tech stack (web/app by a global vendor), supply chain optimization, and faster delivery—critical as 45% of KFC sales are home-delivered. Devyani gains Pizza Hut marketing/innovation from Yum!, plus 19 Hyderabad KFC stores, for a one-time ?320 crore fee (to be capitalized). This creates a 3,000+ store platform across KFC, Pizza Hut, Costa Coffee, Vango, and Biryani By Kilo.

Market and Growth Focus
India's QSR segment exceeds $25 billion within a $100 billion food services market, but both firms faced SSSG declines from over-expansion. Post-merger priorities: Pizza Hut turnaround (positive contribution in year one, low double-digit margins), calibrated KFC growth, and store relocations over aggressive additions. The deal values Sapphire at ~$934 million, positioning Devyani against Jubilant FoodWorks and Westlife.

Investor Takeaways
Scale Boost: ~?7,800-8,000 crore revenue run-rate, crossing $1B by finalization
Risks: Execution delays, integration costs, consumer spending slowdown.
Opportunity: Track Devyani support levels post-volume surge; QSR consolidation favors technical plays on Nifty indices.
This merger signals QSR maturity in India—watch for synergy delivery amid economic shifts.

source moneycontrol