Shares of Devyani International Ltd surged 8% on 2nd January, while Sapphire Foods India Ltd fell 3.75%. This occurred after the long-anticipated merger of Yum Brands’ India franchisees was officially announced. Notably, Sapphire Foods’ board has approved its amalgamation with Devyani International.

Under the swap ratio, Sapphire Foods shareholders will get 177 Devyani International shares for every 100 shares held. At current prices—Rs 147 for Devyani and Rs 261 for Sapphire—the deal is valued close to market levels.

As part of the merger, Devyani will acquire 19 KFC outlets in Hyderabad from Yum Brands.

Post-amalgamation, Sapphire Foods will be dissolved, with all operations consolidated under Devyani International. Airport and railway captive outlets are excluded.

Separately, Sapphire Foods Mauritius will sell about 5.95 crore shares (an 18.5% stake) to Arctic International. This entity is a part of the Devyani Group. Thereby, promoter consolidation will increase.

The merger is seen as positive for Devyani due to cost and revenue synergies, better operating leverage, and potential valuation gains.

Key monitorables include per-store performance, expansion execution, and changes in the revenue mix. Meanwhile, QSR sector sentiment may be influenced by GST 2.0 recovery and upcoming listings.

At 12:59 PM, Devyani International was up 1.49% at Rs 149.63. Meanwhile, Sapphire Foods was down 3.71% at Rs 252.95 on NSE.

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