KFC and Pizza Hut's Indian operator, Devyani International, saw a 5.3% surge in share price following its announcement of a merger with rival franchisee Sapphire Foods India. This move combines the two major Yum! Brands franchise operators in India into a single entity, overseeing KFC and Pizza Hut's presence in the country. The deal, valued at $934 million, is expected to take 12 to 15 months to finalize, pending regulatory and shareholder approval. The merger aims to accelerate KFC's expansion and revitalize Pizza Hut, which currently trails market leader Domino's by a significant margin. Devyani International anticipates annual synergies of 2.1 to 2.2 billion rupees, or approximately $23 to $25 million, starting from the second full year post-merger. With over 2,000 quick-service restaurant outlets across India, Nigeria, Nepal, and Thailand, Devyani International is the largest franchisee of Yum! Brands in India. Sapphire Foods India, on the other hand, operates 529 KFC and 338 Pizza Hut restaurants in India, along with 119 Pizza Hut and 11 Taco Bell restaurants in Sri Lanka, making it the largest international quick-service restaurant chain in the country. India, with its third-highest concentration of Yum! Brand stores after the U.S. and China, is a high-priority market for Yum! Brands, according to Ranjith Roy, the company's chief financial officer. The proposed merger is expected to drive accelerated expansion and create greater value for both shareholder bases through improved supply chain operations.
