Shareholders reject Butterfly Gandhimathi Appliances-Crompton Greaves merger

Shareholders of kitchenware maker Butterfly Gandhimathi Appliances rejected the proposed merger between the Chennai-headquartered company and Crompton Greaves Consumer Electricals, leaving the companies to continue operating independently. 

“While the approval to the Scheme from majority in number representing three-fourth in value of the equity shareholders (including public shareholders) of Butterfly was obtained at the meeting, approval of majority of the public shareholders of the Butterfly was not received in favour of the Scheme at the said meeting of the shareholders,” Butterfly informed the National Stock Exchange on October 30. 

Its note further said: “This development will not have any significant change in our 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.”  

Crompton’s intimation to the stock exchange said that a total of 28.82 lakh public investors voted regarding the proposal, with 20.93 lakh or 72.61 per cent voting against the merger.  

The split-up showed that non-institutional public investors of Butterfly cast 17.12 lakh votes. Out of that, 16.62 lakh votes or 97.04 per cent were against the merger. Institutional public investors cast 11.59 lakh votes. Out of that, 4.30 lakh or 37.15 per cent voted against the merger.  

The firms had announced their proposed merger on March 25, 2023, through a share swap arrangement, offering 22 Crompton Greaves shares for every five Butterfly shares. About a year earlier, Crompton had acquired a 75 per cent stake in Butterfly and is classified as a promoter entity. Newspaper advertisements also refer to Butterfly as a Crompton company.  

At the time of the proposal, Butterfly’s MD Rangarajan Sriram had said the move would help the Chennai-based company 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,” he had said. 

The southern region accounts for more than 80% of Butterfly’s revenue. The management is eyeing expansion to the northern and western parts of the country in the short term. 

For Crompton, the proposed merger was meant to help unlock the full potential of the combined businesses and enable a greater focus on product innovation, its MD Shantanu Khosla had said.  

The 80-plus years old Mumbai-based electrical equipment maker is the leading manufacturer of fans and residential pumps. Over time, it has also forayed into other categories such as water heaters, air coolers, food processors like mixer grinders, electric kettles and garment care like irons. 

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