Crompton Greaves Consumer Electricals will acquire up to 55% stake in formerly private equity-backed Butterfly Gandhimathi Appliances (Butterfly) for around Rs 1,380 crore , both companies said in regulatory filings.
The deal has been signed at Rs 1,403 per share totalling at Rs 1,379.68 crore and Crompton Greaves will also buy certain Butterfly trademarks from promoter group entities for Rs 30.38 crore.
Crompton would make an obligatory open offer to Butterfly's public shareholders for up to 26% ownership in the company for Rs 1,433.90 per share for a total consideration of up to Rs 2,076.63 crore, according to filings.
In 2012, Fairwinds Private Equity, formerly Reliance Equity Advisors, had invested Rs 100 crore ($20 million then) in Chennai-based Butterfly Gandhimathi in May 2012 when it acquired a 13.7% stake in the entity.
Five years later, the PE firm had sold stake in the firm invested from its legacy fund.
As of December 2021, promoters of Butterfly owned 65% stake in the company while 35% of the stake is divided among mutual funds and other public shareholders.
With the latest deal, Crompton Greaves' long-term strategic ambition of being a top player in the small household appliances category will be accelerated.
Butterfly's complementary product portfolio, combined with scale and channel synergies, will help the company achieve strong revenue growth and profitability, Crompton Greaves said.
The deal is planned to be financed through a combination of internal accruals and debt, it will be subject to usual closing conditions.
Butterfly is a key competitor in the kitchen appliance market, competing against companies like Stovecraft and Singer. Mixer grinders, table-top wet grinders, pressure cookers, stainless steel vacuum flasks, and LPG burners are among the company's appliances.
Founded in 1986, Chennai-based Butterfly Gandhimathi Appliances (earlier known as Gandhimathi Appliances Ltd) undertook a merger with Gangadharam Appliances Ltd (which had the same promoters) and renamed itself Butterfly Gandhimathi Appliances in October 2011.
On Monday, Butterfly Gandhimathi Appliances' stock closed at Rs 1,391.30, up 1.01% on the BSE. It recorded revenues of Rs 870 crore in the fiscal year 2021, and Rs 806 crore in the first nine months of FY 2022, a 22% increase year over year.
Kotak Investment Banking acted as financial advisor and manager to the open offer for Crompton, and Khaitan & Co acted as legal advisor for Crompton.
