India’s KFC, Pizza Hut operator Devyani International jumped as much as 8.3% on Friday after announcing the long-anticipated $934 million merger with smaller peer Sapphire Foods, creating a fast-food major poised to challenge market leader Jubilant Foodworks.
The combined entity will operate more than 3,000 KFC and Pizza Hut outlets, franchises of Yum Brands, in India and overseas, going up against the Domino’s Pizza operator Jubilant’s 3,480 outlets in the country.
Devyani’s stock was last trading 2.8% higher at 151.39 rupees.
The merger was a “welcome strategic move”, said analysts at JP Morgan, as it meant a simplified structure, potential for meaningful cost savings and quicker decision making, helping Devyani compete more effectively with peers and food delivery platforms.
The merger comes as India’s fast‑food franchisees contend with higher operating costs, slowing same‑store sales and margin pressures, while consumers trim discretionary spending. Both Devyani and Sapphire logged losses in the September 2025 quarter.
The combined business could deliver revenue and operating profit 50%–60% above current levels, with a scale and growth trajectory approaching Jubilant’s, though margins are expected to remain comparatively weaker for now, added Emkay Global.
Devyani will issue 177 shares for every 100 Sapphire shares under the deal.
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Sapphire Foods slipped about 3% to 254.25 rupees, while Jubilant’s shares were trading 0.2% lower at 552.20 rupees.
The merger ratio is very close to where the stock prices closed on January 1 and so there is no major price adjustment that can arise out of this deal, said Jefferies analysts.
