Shares of Devyani International Ltd and Sapphire Foods India Ltd traded higher on Tuesday after BSE and NSE issued observation letter for the companies' proposed merger, allowing them to proceed with the next stage of the transaction.

In the observation letters, BSE and NSE said that they had no adverse observations on the proposed scheme from the standpoint of listing regulations, enabling the companies to file the merger proposal before the National Company Law Tribunal (NCLT).

The exchanges, however, asked the companies to provide additional disclosures to shareholders before seeking approval for the scheme. These include details on pre- and post-merger shareholding patterns, assets and liabilities proposed to be transfer, pending litigation and regulatory proceedings, promoter reclassification plans, and Sapphire Foods Mauritius' proposed stake sale to Arctic International.


BSE and NSE clarified that their observations should not be construed as approval of the merger and do not amount to certification of the financial soundness of the scheme or the accuracy of statements made by the companies.

The observation letter will remain valid for six months, during which the companies are required to submit the scheme before the NCLT.

The proposed merger would combine two of India's largest quick-service restaurant franchise operators, bringing together businesses associated with brands such as KFC and Pizza Hut under a single entity.