Devyani International said its board has approved the acquisition of an additional 11.4% equity stake in Sky Gate Hospitality for about Rs 57.5 crore.
The acquisition will be carried out through a combination of cash and issuance of non-convertible redeemable preference shares, the company said in a regulatory filing to stock exchanges on 4 February.
Sky Gate Hospitality operates brands including Biryani by Kilo, Goila Butter Chicken and The Bhojan, and is currently a subsidiary of Devyani International.
Deal to cost Rs 57.5 crore
According to the disclosure, Devyani will pay around Rs 27.5 crore in cash to the promoters and founders of Sky Gate, while the remaining consideration of about Rs 30 crore will be discharged through the issuance of 3 lakh non-convertible redeemable preference shares with a face value of Rs 1,000 each, on a private placement basis. Upon completion of the transaction, Sky Gate will become a wholly owned subsidiary of Devyani International.
The board has also approved a reclassification of the company’s authorised share capital and a consequent amendment to the capital clause of its memorandum of association, subject to shareholder and regulatory approvals. As part of this, Devyani plans to reduce the number of equity shares in its authorised capital and increase the value and structure of its preference share capital.
Devyani International Q3 results
The Yum Brands franchisee reported a wider net loss of Rs 10.3 crore for the quarter, compared with a loss of Rs 0.5 crore in the year-ago period. Revenue, however, rose 11.3% year-on-year to Rs 1,441 crore from Rs 1,294.4 crore.
Operating performance improved, with Ebitda increasing 8.3% to Rs 231 crore from Rs 213.3 crore a year earlier, though margins edged down to 16% from 16.5% in the corresponding quarter.
Sky Gate posted Rs 277 crore FY25 revenue
Sky Gate Hospitality reported consolidated turnover of about Rs 277 crore in FY25, up from Rs 268 crore in FY24 and Rs 218 crore in FY23, excluding revenue from Krazy Kebab Co. and Peanutbutter and Jelly Pvt. Ltd., according to the filing. The company has a paid-up share capital of approximately Rs 23.36 lakh as of 31 December 2025.
The transaction has been classified as a related-party transaction, given Sky Gate’s status as a subsidiary, though Devyani said the acquisition is being carried out at arm’s length. No government or regulatory approvals are required for the acquisition, the company said.
The acquisition is expected to be completed by 31 March 2026. The preference shares issued as part of the transaction will carry a dividend of 0.001% and will be redeemable within a period of up to 10 years from the date of allotment, at a premium determined by the board and the allottee based on defined parameters.
Devyani International said it will seek shareholder approval for the proposed changes through a postal ballot, the notice for which will be issued separately.