Butterfly Gandhimathi Shares Fall On Merger Plan With Crompton Greaves

Shares of Butterfly Gandhimathi Appliances Ltd. declined the most in five months on the merger proposal with Crompton Greaves Consumer Electricals Ltd.

This comes about a year after Crompton moved to pick up a majority stake in the South Indian kitchen appliance manufacturer.

The boards of Crompton Greaves and Butterfly Gandhimathi have proposed a merger of the two companies.

The public shareholders of Butterfly, as on the record date, will receive 22 equity shares of Crompton for every five equity shares held by them in Butterfly, as per the scheme.

After the merger is complete, the public shareholders of Butterfly will own about 3% of the combined entity.

"The merger will unlock various revenue and cost synergies, achieve economies of scale by pooling the combined resources, and provide an impetus to grow across all parts of India ... It will enable more efficient allocation of capital and result in simplification of the corporate structure," the companies said in a joint statement.

Shares of Butterfly Gandhimathi declined 5.10% to Rs 1,210 apiece as of 10:13 a.m., compared with a 0.53% gains in the headline Nifty 50. The stock declined as much as 6.29% intraday, the most since Oct. 17, 2022.

Total traded volume stood at 32 time its 30-day average. The relative strength index was at 36.3.

One analyst tracking the company maintained a 'buy' rating on the stock, according to Bloomberg.

Shares of Crompton Greaves advanced 0.03% to Rs 293.85 apiece in trade on Monday. The stock advanced 2.96% intraday, the most since March 21.

The total traded volume stood at 4.5 times its 30-day average. The relative strength index was at 44.6.

Out of the 45 analysts tracking the company, 40 maintain a 'buy' rating, three recommend a 'hold' and two suggest to 'sell' the stock, according to Bloomberg.

The return potential as calculated by the consensus of analyst estimates, stand at an upside of 30.2% over the next 12 months.