The proposed merger between Butterfly Gandhimathi Appliances and Crompton Greaves Consumer has been rejected by Butterfly's public shareholders. As a result, both companies will continue to operate independently.

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Crompton Greaves, in an official filing, disclosed that the merger gained approval from a majority of Butterfly's equity shareholders, encompassing three-fourths of the total value, which included public shareholders. However, the majority of Butterfly's public shareholders did not endorse the merger.

Crompton Greaves Consumer Electricals unveiled the merger plan with Butterfly Gandhimathi on March 25, nearly a year after acquiring a controlling interest in the Chennai-based company.

Under the merger terms, Butterfly's public shareholders were set to receive 22 Crompton shares for every five Butterfly shares they held, resulting in a 7% premium for Butterfly shareholders. Despite this favourable offer, Butterfly's public shareholders voted against the merger.

As of October 30, Crompton Greaves Consumer Electricals' shares closed at ₹284.20 on the BSE, while Butterfly Gandhimathi's shares ended the day at ₹1,160.10.

Crompton provided detailed information on the voting results, indicating that a significant number of votes were cast against the merger. Non-institutional public investors of Butterfly cast 17.12 lakh votes, with 16.62 lakh votes against the merger, translating to 97.04% against. Institutional public investors cast 11.59 lakh votes, with 4.30 lakh votes against, translating to 37.15% against the merger. In total, public investors cast 28.82 lakh votes, with 20.93 lakh votes against the merger, amounting to 72.61% opposition.

According to Sebi regulations, a scheme of arrangement shall be acted upon only if the votes cast by the public shareholders in favour of the proposal are more than the number of votes cast by the public shareholders against it. Crompton Greaves holds 75% of Butterfly Gandhimathi and is classified as a promoter entity. It was already consolidating Butterfly’s financials post its majority stake acquisition in 2022.

"This development will not have any significant change in our growth strategy," Crompton said in the exchange filing. "The companies will continue to operate as separate entities and work towards fulfilling their mutual strengths while they grow the kitchen appliances category in order to achieve the growth potential of each of the companies, thereby creating value for all the stakeholders."

In the short term, the focus for the management teams is on expanding Butterfly's presence in North and West India, as more than 80% of its revenue is currently generated from the South.