Crompton Greaves Consumer Electricals and home appliances firm Butterfly Gandhimathi announced a merger on March 25, almost a year after the former picked a controlling stake in the Chennai-headquartered firm.
The public shareholders of Butterfly will receive 22 equity shares of Crompton for every five shares held by them in Butterfly, the two sides said in a statement to the media.
After the merger, the public shareholders of Butterfly will hold a 3 percent stake in the combined entity.
The plan is subject to the necessary statutory and regulatory approvals, which are expected to come in the next 12-24 months. The management expects the mandatory National Company Law Tribunal (NCLT) approval by Q4FY24, following which additional shares of Crompton will list and trade.
Rational behind the merger
Apart from unlocking various revenue and cost synergies, the combined entity is expected to benefit from the pooling of human capital that has diverse skills to compete in an increasingly competitive industry.
"Additionally, it will enable more efficient allocation of capital and result in simplification of the corporate structure," the release said.
“It will enable a faster execution of our go-to-market strategy and enable greater focus on product innovation," Shantanu Khosla, Managing Director, Crompton, said.
His Butterfly counterpart Rangarajan Sriram said the merger would enable the company to better leverage the pan-India reach of Crompton, integrate more closely with its consumer appliances business and tap cross-selling opportunities
Current shareholding pattern
In February 2022, Crompton announced the acquisition of a 55 percent stake in Butterfly, following which an open offer took its stake to 81 percent by end of June 2022.
In September, it announced an offer for sale of 6 percent to bring down its holding to 75 percent.
As of December 2022 end, promoter and promoter group held a 82.78 percent stake in Butterfly Gandhimathi including some stake with the Chettiar family, who founded the company. Public shareholding stood at 17.22 percent.
On March 24, the shares of Butterfly Gandhimathi closed at Rs 1,266.25 while those of Crompton Greaves Consumer Electricals closed at Rs 292.45.
Latest financials
In Q3 FY23, Crompton reported a consolidated net profit at Rs 88.19 crore with revenue at Rs 1,516.21 crore. The EBIDTA margin stood at 10.1 percent. This included revenue from Butterfly products as well.
Butterfly Gandhimathi Appliances' net profit came in at Rs 11.7 crore with revenue at Rs 248.4 crore. Its EBIDTA margin stood at 9 percent.
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