Sapphire Foods India (SAPPHIRE) investor relations material

Deal rationale and strategic fit

• Merger creates one of India's largest QSR and F&B platforms with over 3,000 stores, a diversified portfolio of marquee global and local brands, and pan-India reach.

• Unified franchisee for KFC and Pizza Hut across India, consolidating market presence and enabling accelerated growth and profitability.

• Adds a strong international presence in Sri Lanka, complementing existing overseas operations.

• Focus areas post-merger include expanding KFC, strengthening Pizza Hut, and growing the non-Yum portfolio.

• Aims to unlock sustained value creation for stakeholders through scale and operational synergies.

Financial terms and conditions

• Merger executed via a share swap: 177 shares of the acquiring company for every 100 shares of the target, reflecting face value differences.

• Promoter-to-promoter transaction involves approximately 18.5% of the target's equity to be acquired, with an option to assign to a financial investor.

• One-time payment of INR 320 crores to Yum as part of the merger, with this cost to be capitalized.

• Pro-forma FY2025 revenues projected at INR 78,265 million, with EBITDA margin at 17%.

• DIL will pay a one-time charge to Yum! India for merger approval and additional territory license fee.

Synergies and expected cost savings

• Net annual cost synergies estimated at INR 210–225 crores, realized over two years post-merger; 60%+ expected in year one.

• Synergies stem from G&A optimization, procurement negotiations, unified technology investments, and Yum incentives.

• Margin expansion anticipated via productivity gains, overhead optimization, and scale benefits.

• Gross synergies will be less than 1.5x net synergies, as additional costs for new functions are already netted off.

• Centralized procurement, unified tech platforms, and reduced corporate overheads to drive cost efficiencies.