The Competition Commission of India has approved the merger of Sapphire Foods India Limited into Devyani International Limited, along with related transactions, according to a release issued through the Press Information Bureau on Saturday.
The deal brings together two of the operators behind KFC and Pizza Hut in India. The release said Devyani runs KFC and Pizza Hut franchise outlets, is the exclusive Indian franchisee of Costa Coffee, New York Fries and Sanook Kitchen, and owns homegrown brands. Sapphire also runs KFC and Pizza Hut outlets in the country.
The brief release did not give the commission's reasoning.
The terms
The two companies announced the all-stock merger on January 1. Outlook Money reported that Sapphire shareholders will receive 177 Devyani shares of ₹1 face value for every 100 Sapphire shares of ₹2 face value. Sapphire would then be delisted.
One part of the deal has since changed. A plan for Arctic International, linked to Devyani's promoter group, to buy about 18.5% of Sapphire from its promoter was called off by mutual agreement, Venture Intelligence reported. Sapphire Foods Mauritius will instead take Devyani shares on the same terms as other shareholders, and the 177:100 ratio stays.
Why it matters
Restaurant India reported that the merger is expected to create one of India's largest quick service restaurant operators. Devyani is the largest Yum! Brands franchisee in India, according to the same report. The companies have said they plan to speed up KFC's expansion, strengthen Pizza Hut and grow Devyani's other brands.
What next
The approval does not complete the deal. The NSE and BSE have already issued observation letters with no adverse remarks, Restaurant India reported, but the transaction remained subject to other statutory and regulatory approvals as well as the consent of shareholders and creditors of both companies. Outlook Money reported in January that the company had specified a 12-15 month timeline.
This report is for information only and is not investment advice.