British multinational BAT PLC is set to sell up to a 3.5 percent stake in India’s ITC Ltd to institutional investors through a block trade.
In a statement, British American Tobacco PLC (BAT), the single largest shareholder in ITC Ltd (ITC), said its wholly-owned subsidiary Tobacco Manufacturers (India) Ltd (TMI) intends to sell up to 43,68,51,457 ordinary shares in the Indian diversified entity to institutional investors by way of an accelerated bookbuild process (block trade), subject to customary closing conditions.
Based on Tuesday’s closing price of INR 404.25 per share, the value of the total ITC shares planned to be sold by BAT is around INR 17,659.72 crore.
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“The block trade shares represent up to 3.5 per cent of ITC’s issued ordinary share capital,” it said, adding, following completion of the proposed block trade, BAT will remain a significant shareholder of ITC, with 25.5 per cent holding.
BAT’s initial investment in ITC dates back to the early 1900s and the two companies have a longstanding, mutually beneficial relationship, the statement said.
The company said it intends to use the net proceeds of the block trade to buy back BAT shares over a period ending December 2025, starting with 700 million pound in 2024. It will also continue to allocate operating cashflow to fund investment in its transformation and to further deleverage.
“I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders. We look forward to remaining important shareholders in ITC as it continues its journey of growth,” BAT Chief Executive Tadeu Marroco said.
He further said, “With this transaction BAT can accelerate the start of a sustainable buyback, while enabling us to continue to deleverage towards a new target range of 2-2.5x adjusted net debt/adjusted EBITDA.”
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“ITC is a valued associate of BAT in an attractive market with long-term growth potential where BAT benefits from exposure to the world’s most populous market,” the company said.
As one of India’s leading FMCG enterprises, ITC has delivered significant value for its shareholders and BAT continues to be fully supportive of ITC’s management team, performance and strategy, the statement by BAT said.
BAT is into multi-category consumer goods business. Its strategic portfolio comprises global cigarette brands and a growing range of nicotine and smokeless tobacco products, including vapour brand Vuse; heated product brand ‘glo’ and Velo, a modern oral (nicotine pouch) brand.