Devyani International and Sapphire Foods India, which operate KFC and Pizza Hut quick service chains in India, are merging operations to create the country's largest single quick-service restaurant (QSR) entity, the two announced in separate stock exchange filings late on Thursday.

Sapphire Foods' merger with Devyani will result in a joint entity operating over 3,000 stores and comes into effect April 1.

Both firms are listed. As part of the proposed merger, Devyani will issue 177 shares for every 100 shares of Sapphire. Annual synergies of ₹210- 225 crore are expected in the second full year of operations of the combined entity.

ET first reported the development on July 4.

Devyani is owned by diversified entrepreneur Ravi Jaipuria, who is chairman of RJ Corp's Varun Beverages, bottling partner of PepsiCo. Sapphire was set up in 2015 by Samara Capital to operate Yum! Brands franchisees in India.

Devyani is the largest Indian franchisee of US-based Yum! Brands - which owns KFC and Pizza Hut - and operates more than 2,000 outlets across 280-odd cities in India, Thailand, Nigeria and Nepal.International Presence | page 13

Devyani also holds Indian franchisee rights for global chains such as Costa Coffee, Tea Live, New York Fries and Sanook Kitchen. Its India brands include Vaango, The Food Street, Biryani By Kilo and Goila Butter Chicken, which it acquired from Sky Gate Hospitality.

Ravi Jaipuria, non-executive chairman of Devyani International, said the consolidation "marks a significant milestone, resulting in Devyani holding franchise rights across the entire Indian market for KFC and Pizza Hut brands." The merger also adds a strong international presence in Sri Lanka, which complements existing overseas operations, he said.

"This transaction reflects the strong partnership between Samara Capital Group and RJ Corp," said Sumeet Narang, nominee director of Sapphire Foods and founder of Samara Capital.

Across India and Sri Lanka, Sapphire Foods operates over 1,000 restaurants.