Devyani International shares surge 8%, Sapphire Foods tanks 6% on merger move. Check details here

Devyani International's share price gained as much as 8% on Friday, January 2, while Sapphire Foods' stock cracked by nearly 6%, following the long-awaited announcement of the merger of Yum Brands’ India franchisees.

Devyani International shares touched an intraday high of ₹157.37. Meanwhile, Sapphire Foods shares hit an intraday low of ₹252.90 apiece in trade today.

Devyani International-Sapphire Foods merger details

In an exchange filing, the company announced that the board has approved the merger of Devyani International and Sapphire Foods, marking a strategic consolidation of the two companies.

The company further informed that the proposed merger is subject to receipt of all customary regulatory & statutory approvals, including approvals from the stock exchanges, the Competition Commission of India, the National Company Law Tribunal, and the shareholders and creditors of both companies.

The approval process is anticipated to take around 12 to 15 months, after which the merger will come into effect.

“Upon completion, the transaction will result in DIL becoming one of the largest quick-service restaurant (QSR) operators in India by combining the operations of both companies, positioning the merged entity for the next phase of accelerated growth, scale, and profitability,” the company said in the filing.

It further said that the merger of the two companies will happen through a share swap mechanism. As per the approved swap ratio, Sapphire Foods shareholders will get 177 shares of Devyani International for every 100 shares they own. Based on current market prices—around ₹147 for Devyani and ₹261 for Sapphire—the deal appears to be valued broadly in line with prevailing market levels.

Under the amalgamation, Devyani International will also take over 19 KFC outlets in Hyderabad, presently run by Yum Brands.

Separately, Sapphire Foods Mauritius will sell around 5.95 crore shares, representing an 18.5% stake, to Arctic International. Arctic International is a Devyani Group entity, effectively increasing promoter-level consolidation ahead of the merger.

Following the merger, Sapphire Foods will be dissolved without undergoing liquidation, with all its operations absorbed into Devyani International.

The consolidation is intended to house KFC and Pizza Hut businesses under one listed entity, unlocking operational synergies and scale advantages. Captive outlets located at airports and railway stations, however, are excluded from the merger.

“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.

Brokerage JM Financial said that its back-of-the-envelope calculations suggest that the merger will result in a combined equity value of ₹38,700 crore (based on ~28X Dec’27E Pre-Ind AS EV/EBITDA), implying an upside of ~45% over the current combined market capitalisation of ~ ₹266,00 crore.

It maintained its ‘Buy’ rating on Devyani for now, with a target price of ₹180, saying it's currently not baking in the merger into its numbers.

As per a CNBC TV-18 report, global brokerage UBS has maintained a 'Buy' rating on Devyani International as it believes the merger should deliver scale benefits and help streamline execution. It has a target price of ₹190 for the stock.

Devyani International and Sapphire Foods share price trend

Devyani International share price has remained under pressure as the stock has lost 10% in six months and 20.48% in one year. Devyani International share price hit a 52-week high of ₹209.75 apiece on January 6, 2025 and a 52-week low of ₹122.25 on December 18 on NSE.

Meanwhile, Sapphire Foods' share price has also remained volatile amid weak market sentiments. The stock has gained 4.56% in a month; however, it has fallen 19% in the last six months.

Sapphire Foods share price touched a 52-week high of ₹374.65 on January 6 and a 52-week low of ₹221.40 on December 18, 2025.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.