Sapphire Foods has announced that the company is going to be merged with Devyani International soon.
Sapphire Foods India Limited, the operator company of KFC and Pizza Hut, is going to merge with Devyani International Limited. The special thing is that it is considered to be the biggest merger of pizza-burger in the world. According to media reports, this deal is happening at a time when fast-food franchises in India are facing declining sales and margin pressure. Due to rising inflation, consumers are ordering food at home instead of eating outside. Under the deal, Devyani will issue 177 shares for every 100 shares of Sapphire and is expected to generate annual profits of Rs 210 crore to Rs 225 crore from the second full year of operation of the joint unit. Under the deal, Arctic International, a group company, will acquire approximately 18.5 per cent paid-up equity of Sapphire Foods from the existing promoters, with an option to transfer the stake to a financial investor with mutual consent.
The process will take up to 15 months
The proposed merger is subject to all regulatory and statutory approvals, including approval from the Stock Exchange, Competition Commission of India, National Company Law Tribunal and approval from shareholders and creditors of both the companies. The process of obtaining these approvals is expected to take approximately 12 to 15 months, after which the merger will become effective. Yum Brands’ partner companies operate more than 3,000 outlets in India and abroad, including dine-in restaurants of KFC and Pizza Hut. The main competition of these companies is with the Indian operators of McDonald’s and Domino’s pizza chains – Westlife Foodworld and Jubilant Foodworks.
QSR will be the country’s biggest
Upon completion of the transaction, Devyani International will combine the operations of both the companies to become one of India’s largest quick-service restaurant (QSR) operators, according to the document filed by the company with the stock exchange. Ravi Jaipuria, Non-Executive Chairman, Devyani International Limited, said that the merger of Devyani International Limited and Sapphire Foods India Limited is an important achievement and a decisive step in our growth journey. DIL has acquired the franchise rights for KFC and Pizza Hut brands across the Indian market. This merger also adds to our strong international presence in Sri Lanka, further strengthening our existing foreign operators.
Rise in shares of companies
After this announcement, there was a tremendous rise in the shares of Devyani International and an increase of up to 8 percent was seen. According to BSE data, shares of Devyani International rose by about 8 percent during the trading session to reach Rs 159.45. Whereas in the morning it opened with a rise of Rs 156.90. At 10:55 am, the company’s shares are trading at Rs 150.45 with a rise of about one and a half percent.