Crompton Greaves Consumer proposes strategic merger with Butterfly Gandhimathi Appliances
1 min read 26 Mar 2023, 06:06 PM ISTThe merger is seen to unlock various revenue and cost synergies, and achieve economies of scale by pooling the combined resources and provide an impetus to grow across all parts of India.
PremiumCrompton Greaves Consumer Electricals has proposed a scheme of amalgamation of Butterfly Gandhimathi Appliances with the company. Both are listed companies and the merger will take place through shares swap. This merger is expected to accelerate and smoothen the realization of synergies of the combined business.
Under the merger deal, the public shareholders of Butterfly as of the record date will receive 22 equity shares of Crompton for every 5 equity shares held by them in Butterfly.
Post the completion of the merger, the public shareholders of Butterfly will hold a 3% stake in the combined entity.
Shantanu Khosla, Managing Director – Crompton said “The merger is an important strategic step in the Company’s journey and will help unlock the full potential of the combined businesses. It will enable a faster execution of our Go-To-Market strategy and enable greater focus on product innovation. We are confident that this will create significant value for all of our stakeholders."
Further, the merger is seen to unlock various revenue and cost synergies, and achieve economies of scale by pooling the combined resources and provide an impetus to grow across all parts of India.
Rangarajan Sriram, Managing Director – of Butterfly said that the proposed merger will enable Butterfly to better leverage the pan-India reach of Crompton, integrate more closely with Crompton’s consumer appliances business, and tap cross-selling opportunities. It will also provide greater avenues for the growth and development of our people.
Also, the combined entity is expected to benefit from the pooling of human capital that has diverse skills, talent, and vast experience to compete in an increasingly competitive industry.
Additionally, the combined entity will enable more efficient allocation of capital and result in simplification of the corporate structure.
For the merger, Kotak Investment Banking is the financial advisor and also provided a fairness opinion to the board of directors of Crompton on the share exchange ratio.
While SBI Capital Markets provided a fairness opinion to Butterfly’s Board for the merger.
Ernst & Young Merchant Banking Services LLP and PwC Business Consulting Services LLP, the independent valuers appointed by Crompton and Butterfly respectively, have recommended a share exchange ratio for the merger.
Khaitan & Co acted as the legal advisor.
Last week, on Friday, Crompton Greaves' share price closed at ₹292.45 apiece marginally up on BSE. While Butterfly's stock closed at ₹1,266.25 apiece up by 5.20%.
