The boards of Crompton Greaves Consumer Electricals Ltd. and Butterfly Gandhimathi Appliances Ltd. have proposed a merger of the two companies.
This comes about a year after Crompton moved to pick up a majority stake in the South Indian kitchen appliances manufacturer.
In the proposed scheme of amalgamation, public shareholders of Butterfly as on the record date will receive 22 equity shares of Crompton for every 5 equity shares held by them in Butterfly.
"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...Additionally, it will enable more efficient allocation of capital and result in simplification of the corporate structure," the companies said.
After the merger is complete, the public shareholders of Butterfly will hold about 3% stake in the combined entity.
The scheme is subject to the necessary statutory and regulatory approvals including approval of the stock exchanges, SEBI, the respective shareholders and creditors of each of the companies and NCLT (Mumbai and Chennai benches).
“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," said Shantanu Khosla, managing director at Crompton.
“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," said Rangarajan Sriram, managing director at Butterfly.
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