Crompton Greaves Consumer shares gain on announcement of acquiring controlling stake in Butterfly Gandhimathi Appliances

Shares of Crompton Greaves Consumer Electricals Ltd surged 5 per cent to Rs 396.35 a share in Wednesday's intraday trade on the BSE as electric household appliance maker announced acquisition of controlling stake in Butterfly Gandhimathi Appliances Ltd. 

At 10.15 am, Crompton Greaves Consumer Electricals stock was trading with nearly 3 per cent gain or higher by Rs 11 to Rs 389. 65 a share. Crompton Greaves Consumer Electricals shares have largely traded flat in the past one year after hitting 52-week high of Rs 512.05 on the BSE in September last.  

As on February 23, the stock has given negative return of over 2 per cent in a week time, declined by over 7% in a month, fell more than 12 per cent in three months and gave a negative return of 11% in the past six months, showed technical data of the stock. It traded flat with nearly 2 per cent in the past one year.  

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Crompton Greaves Consumer to acquire up to 55% stake in Butterfly Gandhimathi 

Earlier, as per a BSE filing by the consumer electric equipment make, Crompton Greaves Consumer Electricals Ltd signed definitive agreements on February 22, 2022 with certain members of the promoter group of Butterfly Gandhimathi Appliances Ltd to acquire (a) upto 55% stake at Rs 1,403.00 per equity share, aggregating up to Rs 1,379.68 crore.  

Besides, it will also buy certain Butterfly trademarks in allied and cognate classes from promoter group entities for Rs 30.38 crore. 

"Crompton has, in its long-term strategic plan, laid out the roadmap to "Extend the Core Product Portfolio". A key step in this roadmap is to strengthen the small domestic appliances category. Butterfly, a brand with a vintage of over 5 decades, has grown to become a strong brand in South India, with deeply ingrained core values and positive culture amongst its employees. We appreciate the trust the promoter family behind Butterfly is placing in us to take the company to greater heights," said Shantanu Khosla, Managing Director.  

As per the agreement, Crompton will launch mandatory open offer to the public shareholders of Butterfly, for acquiring up to 26% stake in Butterfly at a price of Rs1,433.90 per equity share, aggregating up to Rs 666.57 crore; for an aggregate total consideration of up to Rs 2,076.63 crore. 

As per the company, the transaction is aimed at accelerating Crompton's long-term strategic goal of becoming a leading player in the small domestic appliances segment. 

What does Butterfly Gandhimathi Appliances do? 

A leading brand of home appliances in South India, Butterfly's leading kitchen and small domestic appliances portfolio includes Mixer Grinders, Table Top Wet Grinders, Pressure Cookers, Stainless Steel Vacuum Flasks, LPG Stoves and Non-Stick Cookware.  

Butterfly Gandhimathi Appliances financials 

In FY 21, Butterfly reported revenues of Rs 870 er ( ~ 21 % CAGR over the period FYl 7-21 ), with EBITDA of INR 80 er. In 9M FY22, Butterfly reported revenues of INR 806 er (yoy growth of ~22%) and EBIIDA of Rs 75 crore.