Sapphire Foods shares rise 9% as report says company may merge into Devyani International

Sapphire Foods shares rallied over 9 percent on July 4 after a report said that Yum! Brands, the American owner of popular food chains KFC and Pizza Hut, is in talks to facilitate the merger of its two franchisee partners in India, Devyani International Ltd (DIL) and Sapphire Foods.

Both Devyani International and Sapphire Foods India operate KFC and Pizza Hut as franchisee partners of Yum! Brands. The American company is now aiming to join its two Indian partners into one single entity, The Economic Times reported citing people familiar with the matter.

Devyani International may acquire all franchise rights of KFC and Pizza Hut from Sapphire Foods, or all of the KFC franchise stores in India may get consolidated under its brand name, as part of the proposed merger, the report added.

The share swap ratio for the merger may be fixed at 1:3, the report cited a source as saying. This means that every shareholders of Sapphire Foods will get one share of Devyani International for every three shares they own in the former company.