Butterfly Gandhimathi public shareholders reject merger plan with Crompton

Butterfly Gandhimathi Appliances Ltd shares were trading 0.71% up in early morning trade today after its public shareholders voted "overwhelmingly" against the merger with Crompton Greaves Consumer Electricals Ltd. The merger deal was turned down despite the possibility of 7% premium.

"While the approval to the Scheme from a majority in number representing three-fourths in value of the equity shareholders (including public shareholders) of Butterfly was obtained at the meeting, approval of a majority of the public shareholders of the Butterfly was not received in favour of the Scheme at the said meeting of the shareholders," Butterfly Gandhimathi says in a stock exchange filing.

The merger scheme was subject to approval of a majority in number representing three-fourths in value of the equity shareholders (including public shareholders) of Butterfly; and a majority of public shareholders of Butterfly.

Both companies have said the development will not have any significant change in their growth strategy. "The companies will continue to operate as separate entities and work towards fulfilling their mutual strengths while they grow the kitchen appliances category in order to achieve the growth potential of each of the companies, thereby creating value for all the stakeholders," the companies say.

Crompton had earlier proposed a merger plan with Butterfly on March 25, 2023, post the company bought a controlling stake in the company. The merger plan proposed 22 shares of Crompton for every five shares owned by public shareholders in Butterfly.

Shares of Crompton Greaves Consumer Electricals Ltd, however, were trading 0.41% down at ₹281.80 on the NSE today. Butterfly is a leading kitchen appliances player, especially in the South Indian market. It is renowned for its high-quality products, particularly in the core categories of mixers, wet grinders, cookers and stoves.

Crompton recorded a consolidated revenue of ₹869.61 crore in FY 2022-23, compared to ₹394.11 crore in FY 2021-22. Its EBITDA stood at ₹770.47 crore, compared to ₹769.45 crore in FY 2021-22. The profit grew from ₹578.38 crore in FY 2021-22 to ₹476.40 crore in FY 2022-23.

Voting details

The details furnished by Crompton show a total of 17.2 lakh votes were polled by Butterfly's non-institutional public investors, of which 16.6 lakh votes were polled against the merger plan, which translates to 97.04% votes against it and 2.96% in favour.

A total of 11,59,485 votes were polled by public-institutional holders, with 7,28,715 votes in favour, which translates to 37.15% votes polled against the merger plan.

A total of 28.82 lakh shares were polled, of which 20.9 lakh were polled against the merger plan, translating to 72.61% going against the proposed merger. Notably, the SEBI rules allow a merger between the companies only when votes polled for the merger are higher than those against it.