Crompton Greaves Consumer swoops on Butterfly Gandhimathi Appliances

Crompton Greaves Consumer said that it signed definitive agreements on February 22 to acquire up to 55% stake in Butterfly Gandhimathi Appliances for Rs 1,379.68 crore as the electrical consumer durables company looks to raise its play in small domestic appliances.

The company, which will do the deal at Rs 1,403.00 per share, will also buy certain Butterfly trademarks from promoter group entities for Rs 30.38 crore.

Moreover, Crompton will also launch a mandatory open offer for 26% of the firm engaged in manufacturing, marketing and distribution of kitchen and small domestic appliances, at a price of Rs 1,433.90 per share. This prices the open offer at Rs 666.57 crore.

The total deal, comprising 55% stake, open offer and trademarks, will be worth Rs 2,076.63 crore and is expected to be financed through a mix of internal accruals and debt.

This comes after Moneycontrol first reported that Crompton is set to swoop on the firm.

Crompton said the acquisition is a transformational step towards its long-term strategic goal of becoming a leading pan-India player in small domestic appliances. As one of the few integrated manufacturers in this space, Butterfly offers immediate scale in kitchen appliances with its diverse portfolio, it added.

Shantanu Khosla, managing director of Crompton, said, "Crompton has in its long-term strategic plan laid out the road map to "Extend the Core Product Portfolio". A key step in this roadmap is to strengthen the small domestic appliances category. Butterfly, a brand with a vintage of over five decades, has grown to become a strong brand in South India. Butterfly's proven channel and brand strategy will form the base for a stronger small domestic appliances business led by mixer grinders. This sets up a platform for a full kitchen play, which will enable a stronger connect with every home."

VM Lakshminarayanan, chairman, Butterfly, said, "This step will provide an opportunity for the Butterfly brand to achieve pan-India reach. Crompton is a synergistic fit and there is great potential for powerful complementarity."

Speaking to CNBC-TV18, managing director of Butterfly, VM Seshadri, said that he is happy with Crompton's offer, adding, "After the deal, current promoters will not be classified as promoters, and will not be part of the board." They will hold less than 10% stake and have signed a non-compete clause with Crompton.

Kotak Investment Banking acted as financial advisor and manager to the open offer for Crompton, and Khaitan & Co acted as legal advisor for Crompton.