Devyani International merger update 2026: SFML exit off

What changed on August 26, 2026

Sapphire Foods India Limited said its Board approved a revised scheme of arrangement for its proposed amalgamation with Devyani International Limited on August 26, 2026. The revision follows the termination of a secondary share sale transaction involving promoter Sapphire Foods Mauritius Limited (SFML). Under the revision, Sapphire Foods removed the consummation of the secondary sale as a condition precedent for the merger scheme to become effective.

The practical effect is procedural rather than economic for public shareholders. SFML will now receive shares of Devyani International under the original exchange ratio, similar to other Sapphire Foods shareholders. The company also indicated that SFML and Arctic International Private Limited may explore a secondary transaction later, subject to applicable laws, but that possibility does not change the current merger terms.

Why the condition precedent was removed

The merger framework agreement was amended and restated to reflect the termination of the share purchase agreement between SFML and Arctic International Private Limited. The parties terminated the agreement by mutual consent following commercial discussions. With that agreement no longer in force, Sapphire Foods updated the scheme so that the merger does not depend on the promoter-led secondary sale being completed.

This is a common clean-up step in complex deal structures. By removing a condition that is no longer actionable, the scheme can proceed through the regulatory and shareholder approval pipeline without being tied to a separate transaction.

Share swap ratio stays fixed at 177:100

The share exchange ratio remains unchanged at 177 equity shares of Devyani International for every 100 shares of Sapphire Foods. The face value noted for the swap is ₹1 per Devyani share and ₹2 per Sapphire Foods share. Sapphire Foods also noted that the termination of the promoter’s exit plan did not alter the valuation basis agreed earlier, referencing the ratio that had been agreed in January 2026.

For eligible Sapphire Foods shareholders, the key takeaway is that the revised scheme does not change the share-swap entitlement. The modification is limited to the scheme conditions, not to pricing or exchange mechanics.

Deal structure and approvals already on record

Devyani International has previously disclosed that its Board approved a scheme of arrangement under Sections 230–232 of the Companies Act to merge Sapphire Foods and Devyani International, with an appointed date of April 1, 2026. The merger is structured entirely through a share swap, under which Devyani International will issue fresh equity shares to Sapphire Foods shareholders in the 177:100 ratio.

Both companies have indicated that the scheme requires regulatory and statutory approvals, including approvals from shareholders and creditors. In a separate regulatory milestone disclosed earlier, BSE and NSE issued observation letters on June 12, 2026, with NSE providing a “no objection” letter and BSE conveying “no adverse observations” for the composite scheme. Those observation letters were stated to be valid for six months from June 12, 2026.

What the updated SFML treatment means

Because the secondary sale is no longer a gating item, SFML will receive Devyani International shares in line with other shareholders as part of the merger consideration. This aligns promoter treatment with the broader share-swap mechanics under the scheme, at least for the purpose of the merger implementation.

Sapphire Foods also clarified that any potential future secondary transaction between SFML and Arctic, if explored later, would be subject to applicable laws. Importantly, it said that such a future transaction would not impact the current merger terms.

Background: why this is a major consolidation in QSR

The proposed combination is positioned as a consolidation of two Pizza Hut and KFC franchise operators in India. The companies have described the merger as a defining milestone, with an expected combined footprint of over 3,000 restaurants and combined annual revenue approaching USD 1.0 billion.

They have also disclosed an estimate of annual synergies of ₹2.0–2.25 billion once integration is completed. These targets are contingent on execution and completion of integration steps, but the numbers provide context for why the transaction has drawn market attention.

Market reactions cited during earlier milestones

On June 16, 2026, shares of Devyani International and Sapphire Foods rose as much as 9% after BSE and NSE gave their no objection and no adverse observations, respectively, to the proposed merger scheme. Devyani International was reported to have touched an intraday high of ₹121.38, while Sapphire Foods rose up to ₹185.58 on that day.

Separately, Devyani International’s share price on NSE was reported at ₹119.63 as of July 29, 2026 at 12:13 PM, up 5.20% from the previous close. These price points were disclosed as market snapshots tied to the merger’s regulatory progress.

Parallel restructuring update: Sky Gate Hospitality amalgamation

Alongside merger updates, Devyani International informed investors that the National Company Law Tribunal (NCLT) has pronounced the First Motion Order relating to the amalgamation of Sky Gate Hospitality Private Limited and its wholly owned subsidiaries with Devyani International. The company also said it is in the process of filing the Second Motion Petition, indicating that process is progressing through the NCLT stages.

This parallel item is distinct from the Sapphire Foods merger but is relevant to investors tracking Devyani International’s broader corporate restructuring agenda.

Key facts table

Why the revision matters for the merger timeline

By removing an external condition tied to a terminated share sale, the scheme is less exposed to delays unrelated to the amalgamation approvals. The companies have maintained that the merger process continues in the ordinary course, subject to requisite approvals from regulators and shareholders.

Sapphire Foods stated that the change has no impact on shareholders of either entity other than the procedural adjustment to the scheme conditions. For investors, the central economic terms remain the same: the fixed share swap ratio and the requirement that the scheme must still clear regulatory, statutory, and shareholder steps before it can be implemented.

Conclusion

Sapphire Foods’ August 26, 2026 revision removes the promoter secondary-sale completion as a condition precedent, while keeping the 177:100 share swap unchanged and preserving the merger’s approval roadmap. The next milestones remain the requisite regulatory and shareholder approvals, and the progression of filings before the NCLT where applicable.