BAT to offload 2.3% stake in ITC via block deal, aims to raise £200 million

Following this transaction, BAT’s stake in ITC will reduce from 25.4% to 23.1%.
| Photo Credit:
Rupak De Chowdhuri/Reuters

UK-based cigarette major British American Tobacco (BAT) on Tuesday announced that its wholly-owned subsidiary Tobacco Manufacturers (India) intends to sell 2.3 per cent stake in diversified conglomerate ITC Ltd to institutional investors by way of an accelerated bookbuild process.

In a filing with the London Stock Exchange, BAT said the proposed transaction will give it increased financial flexibility as it delivers on its commitment to invest in transformation, deleverage, and sustainable shareholder returns.

“Proceeds will be used to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor (adjusted for Canada) by the end of 2026 and to continue our sustainable buyback programme by enabling an intended £200m increase in the share buyback to a total of £1.1bn in 2025,” it informed.

British American Tobacco is the largest shareholder of ITC Ltd., with a 25.4 per cent stake. In March last year, BAT sold a 3.5 per cent stake through block trades to institutional investors.

Tadeu Marroco, Chief Executive of BAT, on Tuesday said, “ITC is a valued associate of BAT in an attractive geography with long-term growth potential where BAT benefits from exposure to the world’s most populous market. Whilst this transaction supports delivery on our commitments to BAT shareholders, we continue to view ITC as a core strategic component of our global footprint as we partner on business opportunities in India. I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders.”

BAT’s initial investment in ITC dates back to the early 1900s, and the two companies have a longstanding, mutually beneficial relationship. “As one of India’s leading FMCG enterprises, ITC has delivered significant value for its shareholders. Following completion of the proposed Block Trade, BAT will remain a significant shareholder of ITC, with a 23.1 per cent holding,” it said in the LSE filing.

Cigarette-to-soap maker ITC Ltd last week declared a nearly four-fold jump in its standalone net profit to ₹19,561.57 crore for the fourth quarter of last fiscal due to a one-time exceptional gain of ₹15,179.43 crore of discontinued operations.

The diversified conglomerate posted a net profit of ₹5,020.20 crore in the fourth quarter of FY24.

During the fourth quarter last fiscal, net profit from the company’s continuing operations (excluding exceptional gains related to demerger of its Hotels business) stood at ₹4,874.71 crore, which was marginally up by 0.77 per cent year-on-year.

Notably, ITC Ltd.’s hotel business was demerged into ITC Hotels Ltd. on January 1, 2025. The hospitality major’s equity shares were listed on the NSE and BSE on January 29.

Published on May 27, 2025