Crompton Greaves – Butterfly Merger Announced
Fast Moving Electrical Goods (FMEG) manufacturer, Crompton Greaves Consumer Electricals Ltd. has announced its merger with Chennai-headquartered kitchen appliances manufacturer, Butterfly Gandhimathi Appliances Ltd. As per a joint investor presentation by the companies dated 25th March 2023, this merger is expected to come through during the fourth quarter of FY-24.
Crompton to Gain from more Distribution Channels in the South, Butterfly to Expand its Reach
While Crompton is an established brand with a pan-India reach, Butterfly has a strong presence in the southern states of India. Therefore, this merger will help Crompton capitalise on Butterfly’s southern Indian distribution channels while enabling Butterfly access to a wider customer base geographically.
Moreover, this merger will allow the two companies to dip into a shared resource pool and exploit a combined market reach while enhancing operational cost efficiency. This would be done by achieving economies of scale, meaning that the cost of production would be spread over a larger product range, thereby making the operations more cost-effective.
Other than this, the companies stated that this move would help simplify the corporate structure, thus allowing more judicious use of capital.
Speaking about this merger, Mr. Shantanu Khosla, Managing Director of 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 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”.
While speaking about the advantages of this merger to Butterfly, the company’s MD, Mr. Rangarajan Sriram said, “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 growth and development of our people”.
Crompton Greaves-Butterfly Merger to be Executed through Shares Swap
Crompton and Butterfly are both listed entities on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The proposed merger of these two entities will be executed through share swapping and will result in one listed entity.
The companies have specified that for every 5 shares in Butterfly, its shareholders will be given 22 shares of Crompton. Further, after this amalgamation, Butterfly’s shareholders will collectively hold close to 3% equity in the merged entity, while the rest will be held by Crompton’s shareholders.
As of now, Crompton holds about 25% equity stake in Butterfly, which will stand cancelled post this merger.
About Crompton Greaves Consumer Electricals Ltd.: Crompton Greaves Consumer Electricals Ltd. is a Mumbai-headquartered major FMEG brand in India. In FY-22, the company reported a top line of Rs. 5,466.80 crore. Crompton’s wide range of offerings includes electric fans, residential pumps, air coolers, LED bulbs, water heaters, electric kettles, food processors, mixer grinders and electric irons.
About Butterfly Gandhimathi Appliances Ltd.: Butterfly Gandhimathi Appliances Ltd. has its headquarters in Chennai, Tamil Nadu. The company’s revenue during the 2021-22 financial year was Rs. 1,007.20 crore. Butterfly specialises in kitchen appliances, and its product range includes mixer grinders, Stainless Steel and non-stick cookware, pressure cookers and LPG Stoves.
