Crompton, Butterfly Gandhimathi to merge, expect NCLT approval by Q4 FY24
Crompton Greaves Consumer Electricals and Butterfly Gandhimathi, a home appliances company, have announced a merger on March 25, almost a year after the former acquired a controlling stake in the Chennai-based company.
According to a statement released to the media, public shareholders of Butterfly will receive 22 equity shares of Crompton for every five shares they hold in Butterfly.
After the merger, public shareholders of Butterfly will own a 3 percent stake in the combined entity. The merger is subject to necessary statutory and regulatory approvals, which are expected to be received in the next 12-24 months.
Management expects the mandatory National Company Law Tribunal (NCLT) approval by Q4FY24, after which additional shares of Crompton will list and trade.
Rational behind the merger
The merger will unlock various revenue and cost synergies, and benefit from the pooling of human capital with diverse skills to compete in an increasingly competitive industry.
The release also stated that it would enable a more efficient allocation of capital and simplify the corporate structure, thereby enabling a faster execution of the go-to-market strategy and greater focus on product innovation.
Crompton's Managing Director, Shantanu Khosla, said the merger would enable a faster execution of their go-to-market strategy and greater focus on product innovation.
Rangarajan Sriram, Butterfly's counterpart, said the merger would allow the company to better leverage Crompton's pan-India reach, integrate more closely with its consumer appliances business, and tap cross-selling opportunities.
As of December 2022 end, the promoter and promoter group held an 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. In Q3 FY23, Crompton reported a consolidated net profit of Rs 88.19 crore with revenue at Rs 1,516.21 crore, including revenue from Butterfly products. 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. As of March 24, Butterfly Gandhimathi shares closed at Rs 1,266.25, while Crompton Greaves Consumer Electricals shares closed at Rs 292.45.