Shares of KFC and Pizza Hut Indian operator Devyani jump on merger with rival franchisee Sapphire

Core Viewpoint - The merger between Devyani International and Sapphire Foods India aims to consolidate operations for Yum! Brands' franchises in India, enhancing growth potential and operational efficiencies [2][3][4]. Group 1: Merger Details - Devyani International plans to merge with Sapphire Foods India, with a transaction value reported at $934 million [2]. - Under the merger terms, Devyani will issue 117 shares for every 100 shares of Sapphire [3]. - The merger is expected to be completed within 12 to 15 months, pending regulatory and shareholder approvals [3]. Group 2: Market Impact - Following the announcement, shares of Devyani International rose by 5.3%, while shares of Sapphire Foods India fell by 6.4% [1][3]. - The merger is anticipated to accelerate KFC's expansion in India and revitalize Pizza Hut, which currently lags behind Domino's [3]. Group 3: Financial Projections - Devyani International expects annual synergies of approximately 2.1 billion to 2.2 billion rupees (around $23 million to $25 million) starting from the second full year post-merger [5]. Group 4: Strategic Importance - Yum! Brands views India as a high-priority market with significant growth potential, indicating that the merger will create greater value for shareholders through improved supply chain operations [4]. - India ranks third in the concentration of Yum! Brand stores globally, following the U.S. and China [7].