Devyani International is up over 4% and Sapphire Foods India is down 6% in intra-day trade today. The shares are in focus on news of the merger with Sapphire Foods announced that it was merging with Devyani International. Devyani International and Sapphire Foods are creating a single unified Yum! India Franchisee for KFC & Pizza Hut.
Devyani International- Sapphire Foods merger: Key details to watch
The scheme of arrangement is such that Devyani International will be issuing 177 shares for every 100 shares of Sapphire.
Devyani International’s group company, Arctic International, will acquire nearly 18.5% of Sapphire Foods’ paid-up equity from existing promoters, with an option to allocate the stake to a financial investor that both parties have mutually agreed upon.
Devyani International expects annual synergies of Rs 210 -225 crore from the second full year of operations of the combined entity.
Merger to address economies of scale
The company further said that the consolidation of the QSR business under the brands KFC and Pizza Hut into a single entity in India would result in economies of scale, except for the captive markets like airports and railway stations. A unified strategy and consumer proposition for both brands will enable growth, reduction of overheads, harmonisation of sales and service channels, and enhanced operational efficiencies.
The merger is subject to a lot of regulatory approvals and other customary conditions, including approvals/non-objections from CCI, BSE and National Stock Exchange of India, NCLT, creditors and shareholders of both companies, and other third parties, as read in an exchange filing by the company.
Sapphire Foods’ share performance
The share price of Sapphire Foods has risen 2.3% in the past five trading sessions. The stock has surged over 3% in the past one month. However, the stock price has declined 20.55% in the previous six months and 25.4% over the previous 12 months.
Devyani International share performance
The share price of Devyani International has risen 4.5% in the previous five sessions. The stock of the QSR chain owner rose 13% in the last one month. Similar to Sapphire Foods, Devyani’s stock price has also declined in the past six months, falling almost 10%. The share erased over 20% of investors’ wealth in the previous one year.
