The shares of Butterfly Gandhimathi Appliances Ltd and Crompton Greaves Consumer Electricals Ltd were in focus on Wednesday after Crompton announced that it will acquire the Chennai-based Butterfly for a total consideration of ₹2,076.63 crore.

The share price of Butterfly hit a record high while Crompton was up 6 per cent post the announcement.

Butterfly recorded a fresh 52-week high of ₹1419.00 on the BSE. At 12:41 pm, it was trading at ₹1399.35, up ₹8.05 or 0.58 per cent. It had opened at ₹1419.00 as against the previous close of ₹1391.30. It recorded an intraday low of ₹1385.45.

Crompton was trading at ₹401.95 on the BSE, up ₹23.35 or 6.17 per cent. It had opened at ₹385.40 as against the previous close of ₹378.60. It recorded an intraday high of ₹403.60 and a low of ₹377.20.

According to a regulatory filing by the Crompton, definitive agreements have been signed with certain members of the promoter group of Butterfly Gandhimathi Appliances Ltd to acquire up to 55 per cent stake at ₹1,403 per equity share aggregating up to ₹1,379.68 crore.

It will also acquire certain Butterfly trademarks in allied and cognate classes from promoter group entities for a consideration of ₹30.38 crore.

Crompton will launch the mandatory open offer to the public shareholders of Butterfly for acquiring up to 26 per cent stake in Butterfly for ₹1,433.90 for a total consideration of up to ₹2,076.63 crore, the announcement said.

According to ICICI Securities, the acquisition will help Crompton in expanding its distribution network and reducing over-dependence on Crompton brand.

“Assuming 5 per cent synergy benefits by FY24, the Butterfly acquisition will lead to earnings accretion. We believe there will be synergies in raw material sourcing, distribution, media sourcing and distribution,” ICICI Securities in a note.

With a 26 per cent correction in stock price over the past six months, it maintained a Buy rating on Crompton with a target price of ₹504.

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