Shares of Devyani International Ltd and Sapphire Foods India Ltd climbed up to 9 per cent in Tuesday's trade as the merger process between the two companies moved forward after Devyani International, in an exchange filing, said it had received an observation letter with 'no objection' from NSE and an observation letter with 'no adverse observations' from BSE. This was required under Regulation 37 of the SEBI Listing Regulations. The scheme remains subject to further approvals, Devyani International said.

Following the development, Devyani International shares surged 8.89 per cent to Rs 121.25. Sapphire Foods India jumped 6.97 per cent to Rs 185.50. Sapphire Foods in another filing said the scheme remains subject to necessary statutory and regulatory approvals. 

Sapphire Foods is a franchisee of Yum! Brands operating quick service restaurants (QSR) under the globally recognized brands KFC, Pizza Hut and Taco Bell, primarily in southern and western parts of India and in Sri Lanka. Devyani is the largest franchisee of Yum! Brands in India and is among the largest operators of chain QSR in India, on a non-exclusive basis, and operates in more than 280 cities in India, Nigeria, Nepal and Thailand. 

In addition, Devyani is the sole franchisee for Costa Coffee, Tea Live, New York Fries and Sanook Kitchen in India. It also owns Biryani By Kilo, Goila Butter Chicken and Vaango brands.

The merger is seen consolidating the QSR business under the brands KFC and Pizza Hut into a single entity, except the captive markets like airports and railway stations, resulting in economies of scale, unified strategy and consumer proposition for both brands enabling growth, reduction of overheads, harmonization of sales and service channels, enhanced operational efficiencies.

It would result in integration of the Sapphire's regional presence in southern and western India and in Sri Lanka with Devyani's pan-India operations and international presence in Nepal, Nigeria and Thailand, thereby creating a unified platform with an enlarged geographical footprint capable of serving customers across India.