Devyani-Sapphire Merger to Create QSR Giant With Nearly 3,000 Stores

The boards of Devyani International and Sapphire Foods on Thursday agreed to merge their businesses, creating one of India’s largest quick-service restaurant (QSR) operators with over 3,000 stores of KFC and Pizza Hut. The deal will bring franchise stores of the US-based Yum! Brands in India and select international markets under a single operator, Devyani, along with a revised commercial arrangement.

Both companies are publicly listed. Under the proposed merger, Devyani will issue 177 shares for every 100 shares of Sapphire. The combined entity is expected to generate annual synergies of ₹210–225 crore from the second full year of operations.

Devyani is promoted by entrepreneur Ravi Jaipuria, who also chairs Varun Beverages, PepsiCo’s bottling partner in India. Sapphire, founded in 2015 by Samara Capital, operates Yum! Brands franchises in the country.

Devyani is the largest Yum! Brands franchisee in India, running over 2,000 outlets across more than 280 cities in India, Thailand, Nigeria, and Nepal. Yum! Brands owns global chains such as KFC and Pizza Hut. Apart from Yum! Brands, Devyani holds franchise rights in India for Costa Coffee, Tea Live, New York Fries, and Sanook Kitchen. Its home-grown portfolio includes Vaango, The Food Street, Biryani By Kilo, and Goila Butter Chicken, which it acquired from Sky Gate Hospitality.

“The consolidation of Devyani International Limited and Sapphire Foods India Limited marks a significant milestone and a decisive leap forward in our growth journey, resulting in DIL holding franchise rights across the entire Indian market for KFC and Pizza Hut brands. The merger also adds a strong international presence in Sri Lanka, which complements our existing overseas operations," said Ravi Jaipuria, Non-Executive Chairman of Devyani International Limited.

“This transaction reflects the shared long-term vision and strong partnership between Samara Capital Group and RJ Corp. We are confident that, under RJ Corp’s leadership, these iconic brands will continue to grow from strength to strength in the years ahead," said Sumeet Narang, Founder of Samara Capital.

How Devyani-Sapphire Merger Helps Them

According to JM Financial, the merger is structured to unlock scale benefits, improve unit economics through operating leverage and revised commercial terms, and strengthen execution across brands and geographies.

"Post integration, the combined entity is expected to benefit from accelerated store expansion, procurement and overhead synergies, and improved cash-flow generation," the brokerage noted.

The management expects steady synergies to start from the second year after integration, giving an EBITDA benefit of ₹200–250 crore, mainly from lower royalty costs, reduced corporate overheads, and other scale advantages. In the first year of integration (FY28), EBITDA is expected to improve by ₹100–150 crore.

After the merger, the combined is expected to offer better growth visibility, stronger resilience in demand cycles and a more robust business model.

The merger is expected to take 12–15 months to complete, including approvals from stock exchanges, the Competition Commission of India, the National Company Law Tribunal, and the shareholders and creditors of both companies.

Details of Merger Deal

Sapphire Foods India Limited (SFIL) will merge with Devyani International Limited (DIL) through a share swap, with 177 DIL shares issued for every 100 SFIL shares. Arctic International, a group company of DIL, will acquire about 18.5% of SFIL’s equity from existing promoters, with the option to assign it to a financial investor. The merged entity will focus on accelerating KFC expansion, revitalising Pizza Hut, and scaling DIL’s emerging brands portfolio.

Yum! Brands has approved the merger and agreed to enhanced waivers for KFC and Pizza Hut to support store expansion and sustainable growth. DIL will also acquire 19 KFC outlets in Hyderabad from Yum! India and pay a one-time merger approval and license fee. This reflects Yum! Brands’ confidence in DIL as India’s largest franchise partner and the RJ Corp Group’s commitment to long-term growth.

After the merger, the combined company will be one of India’s largest QSR platforms, with around 2,875 stores by FY26, covering multiple brands, cuisines, and regions. It is expected to deliver about 15% revenue CAGR and 24–26% CAGR in EBITDA/PAT between FY25–28, with FY28 revenue around ₹12,200 crore and Pre-Ind AS EBITDA of ₹1,420 crore (about 11.7% margins), according to the brokerage firm.