Restaurant India News: Devyani and Sapphire Receive Exchange Nod for Landmark Restaurant Sector Merger

Devyani International Limited (DIL) and Sapphire Foods gained shares in trading after both the National Stock Exchange (NSE) and BSE issued observation letters and provided no adverse observations on the proposed Scheme of Arrangement between the two quick service restaurant (QSR) operators.

According to a regulatory filing, Devyani International has received "observation letters from the NSE and BSE in relation to the proposed Scheme of Arrangement amongst Devyani International Limited (Transferee Company) and Sapphire Foods India Limited (Transferor Company), and their respective shareholders."

The proposed transaction remains subject to statutory and regulatory approvals, along with approvals from shareholders and creditors of both companies.

The development was positively received by investors, with Devyani International shares rising as much as 9 percent during trading, while Sapphire Foods shares gained up to 7 percent intraday.

The merger is expected to create one of India's largest QSR operators by combining the restaurant operations of both companies. Devyani International is the largest franchisee of Yum! Brands in India, operating KFC and Pizza Hut outlets, while Sapphire Foods manages KFC, Pizza Hut and Taco Bell restaurants.

The transaction will be executed through a share-swap arrangement. Under the approved ratio, eligible Sapphire Foods shareholders will receive 177 equity shares of Devyani International for every 100 equity shares held in Sapphire Foods.

As part of the transaction structure, Arctic International, an entity associated with the promoter group of Devyani International, will acquire approximately 18.5 percent of Sapphire Foods' paid-up equity share capital from existing promoters, with an option to assign the stake to a mutually agreed financial investor.

The merged company plans to focus on accelerating the expansion of KFC, strengthening Pizza Hut's market position for long-term growth, and scaling Devyani International's portfolio of emerging brands.

Industry observers view the transaction as a significant consolidation move within India's organised QSR sector, allowing the combined entity to leverage scale, improve operational efficiencies and strengthen its market presence across multiple restaurant formats.

Aakash Shah, Technical Analyst at Choice Broking, said, "Devyani International is showing signs of recovery after a prolonged downtrend, currently trading around Rs 114.66. The stock has witnessed a bounce from the Rs 105 zone, indicating renewed buying interest and the possibility of a short-term base formation."

He further added, "If Devyani sustains above Rs 119, it could trigger a fresh rally towards Rs 130–137, where the next major resistance lies. Rising volumes and a decisive breakout above the 100-day EMA will be key factors to watch for further upside."