City Center, Kolkata, West Bengal, India – 26/06/2019: Pizza Hut outlet at City Center Shopping Mall in Kolkata. (Photo by: Avishek Das/SOPA Images/LightRocket, Getty Images)
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Shares of KFC and Pizza Hut’s Indian operating company Devyani International rose as much as 5.3% after announcing plans to merge with rival franchisee Sapphire Foods India.
Hmm! brand owns fast food chains such as KFC, Pizza Hut and Taco Bell, and operates the chains in India through franchise partners such as Devyani International, Sapphire Foods India and Burman Hospitality.
This agreement will bring together two major Yum! franchise operators. The company will consolidate the Indian brands into a single entity, controlling KFC and Pizza Hut in the country. Debyani International did not confirm the size of the deal, but Reuters reported it was worth $934 million.
Under the terms of the merger, Devyani International will issue 117 shares for every 100 shares of Sapphire Foods India, according to a press release from both companies.
Sapphire Foods India’s stock price fell as much as 6.4% on the move.
The merger is expected to become effective within 12 to 15 months, subject to regulatory and shareholder approval. The companies said the partnership would accelerate KFC’s expansion in the country and give a boost to Pizza Hut, which has lagged behind the market leader. domino pizza By a large margin.
“India is a priority market for us,” says Yum! Ranjith Roy, Brands’ chief financial officer, said: He added that the country has plenty of room for further growth.
He said the proposed merger would accelerate expansion and create “greater value for both companies’ shareholder bases” through improved supply chain operations.
Devyani International is Yum!’s largest franchisee. Brands of India said it expects “synergies” of 2.1 billion to 2.2 billion rupees, or about $23 million to $25 million, annually from the second full year after the merger is completed.
Devyani operates more than 2,000 quick-service restaurants in more than 280 cities across India, Nigeria, Nepal and Thailand. Meanwhile, Sapphire operates 529 KFC restaurants and 338 Pizza Hut restaurants in India, and 119 Pizza Hut and 11 Taco Bell restaurants in Sri Lanka, making it the largest international quick-service restaurant chain in Sri Lanka.
Sumeet Narang, Sapphire Foods India director nominee and founder of private equity firm Samara Capital, said, “India has the potential to become a true jewel in the Yum! global market and this announcement marks an important step in that journey.”
According to the company’s latest financial report, India has the third highest concentration of Yum! brand stores after the US and China.
