The merger of Butterfly with parent company Crompton Greaves is rejected

 The merger of Butterfly with parent company Crompton Greaves is rejected

Mumbai: On Tuesday, the public shareholders of Butterfly Gandhimathi Appliances Ltd., a producer of household appliances, rejected a proposal to combine the business with Crompton Greaves Consumer Electricals Ltd., its promoter company.

Shares of Butterfly Gandhimathi saw a 7% decline due to public dissatisfaction before closing at ₹1085.4 per share on the NSE. Crompton Greaves' stock also ended the day slightly down at ₹282 per share.

Despite owning a 75% share in Butterfly Gandhimathi, the company's promoter, Crompton Greaves, was unable to get the consent of the general public for its planned merger.

This is as a result of the merger being voted against by 72.61% of non-promoters.

Despite the promoter group firm's complete support for the merger, 97% of non-institutional shareholders of the company reportedly voted against it, according to an exchange filing.

Public shareholders own all of the stock of Crompton Greaves Consumer Electricals, the promoter group company.

35.43% of the shares are held by institutional investors, with Mirae Asset Tax Saver Fund holding the highest position (8.5%). Nippon Life India Trustee Ltd-A/C Nippon India Tax (3.31%), UTI Nifty Midcap 150 ET (3.52%), as well as HDFC Mutual Fund (6.10%) are some of the other significant shareholders.

The remaining 64.57% of the shares are held by retail shareholders, who own 11.50% of the shares and 1.58% of the shares respectively. Resident people holding nominal share capital up to ₹2 lakhs and those holding it above that amount hold the remaining shares.

The company stated, "Although the Scheme received approval at the meeting from the vast majority of the shareholders who hold equity (including public shareholders) representing three-fourths of the company's value, the overwhelming majority of Butterfly's public shareholders did not approve the Scheme at the said meeting of the shareholders."

The board of the business authorized a plan on March 25, 2023, to combine Butterfly Gandhimathi Appliances and Crompton Greaves Consumption Electricals Ltd. Butterfly Gandhimathi said in the regulatory filing that the company's growth plan would not be significantly altered by this occurrence.

In order to realize each firm's development potential and produce value for all stakeholders, "the organizations will continue to operate as two distinct entities and work towards fulfilling their mutual competencies while they grow within the appliance category," the statement from the company said.

With performances of -34.4% and -22.16%, respectively, Butterfly Gandhimathi as well as Crompton Greaves respectively have performed poorly compared to the Nifty 50 over the last year, while the Nifty 50 returned 5.9%.