Crompton, an electrical consumer durables company in India, announced that it has signed definitive agreements on February 22, 2022 to: (a) acquire upto 55% stake in Butterfly, a company engaged in the manufacturing, marketing and distribution of kitchen and small domestic appliances (SDA), at a price of INR 1,403.00 per equity share, and (b) Trademarks for a consideration of INR 30.38 er.
Crompton will also launch the mandatory open offer to the public shareholders of Butterfly for the acquisition of up to 26% stake at a price of INR 1,433.90 per equity share. The transaction will be subject to completion of customary closing conditions. The transaction is expected to be financed through a mix of internal accruals and debt, the statement said.
This acquisition is a transformational step towards Crompton’s long-term strategic goal of becoming a leading pan-India player in small domestic appliances. As one of the few integrated manufacturers in this space, Butterfly offers immediate scale in kitchen appliances with its diverse portfolio, increasing the share of SDA in Crompton’ s offering. This diverse portfolio spans a complementary set of segments, including mixer grinders, stoves and cooktops, table top wet grinders, pressure cookers, etc, according to the statement.
Acquiring the Trademarks enables the protection of the exclusivity, legacy, and goodwill of the intellectual property of Butterfly as well as consolidation and expansion in complementary segments. Backed by a ready manufacturing and R&D Infrastructure, along with Crompton’s key capabilities and pan-India reach, Butterfly creates a strong opportunity for innovation and expansion in core and adjacent categories and is expected to unlock synergies for both companies, the statement said.
Shantanu Khosla, Managing Director – Crompton, said, “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. Butterfly is an attractive fit with Crompton’s long-term strategy, vision and strategic pillars. This acquisition provides concrete support to our long-term vision of become a leading pan-India kitchen appliances player. Butterfly’s proven channel and brand strategy will form the base for a stronger SDA business led by mixer grinders. This sets up a platform for a full kitchen play, which will enable a stronger connect with every home. We are excited by the opportunity ahead and wish to serve our valued customers through a larger distribution network and wider range of competitive and innovative products. ”
VM Lakshminarayanan, Chairman – Butterfly, said, “As a 50-year-old family and home grown business, we are proud of the growth story our brand has been a part of. Butterfly is a strong brand in South India, and this step will provide an opportunity for the Butterfly brand to achieve pan-India reach. Crompton is a synergistic fit and together, there is great potential for powerful complementarity going forward. We have great respect for Crompton and are happy that this brand which has been so close to us is being entrusted to good hands at the right stage of its future growth journey. We are certain that Butterfly will reach new heights and successes with its instilled values and culture.”
Kotak Investment Banking acted as Financial Advisor and Manager to the Open Offer for Crompton, and Khaitan & Co acted as Legal Advisor for Crompton.
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