India's Devyani, Sapphire rise after report says Yum plans local franchisee merger

** Indian Pizza Hut and KFC operators Devyani International DEVY.NS and Sapphire Foods SAPI.NS rise 3% to 172.1 and nearly 7% to 342 rupees, respectively

** Yum Brands YUM.N is in talks to facilitate a merger of its two franchisee partners, ET reports

** SAPI tells exchanges it is evaluating "various strategic opportunities in ordinary course" with no details of any deal

** DEVY and YUM did not immediately respond to Reuters' requests for comment

** The negotiations could result in DEVY either acquiring the franchisee rights of KFC and Pizza Hut from SAPI, or all of KFC's franchisee stores in India getting consolidated under DEVY, report adds

** Sapphire shareholders to get one share of DEVY for every three owned, report said