BAT to offload 3.5% stake in ITC via block trade; details here

BAT PLC announced on Tuesday its plans to divest up to a 3.5 percent stake in India's ITC Ltd to institutional investors through a block trade. 

Through its wholly-owned subsidiary, Tobacco Manufacturers (India) Ltd (TMI), BAT aims to sell up to 43,68,51,457 ordinary shares in ITC Ltd (ITC) via an accelerated bookbuild process (block trade), subject to standard closing conditions.

At the closing price of ₹404.25 per share on Tuesday, the total value of ITC shares intended to be sold by BAT amounts to approximately ₹17,659.72 crore.

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Additionally, the statement by ITC further mentioned that after the completion of the proposed block trade, BAT would retain a substantial stake in ITC, maintaining a 25.5 percent ownership interest.

According to the statement, BAT's initial investment in ITC traces back to the early 1900s, marking the genesis of a longstanding and mutually advantageous relationship between the two companies.

The statement further outlines the company's plans to utilize the net proceeds from the block trade for buying back BAT shares until December 2025. The process is set to commence with £700 million in 2024. Additionally, BAT will continue allocating its operating cash flow towards funding investments in its transformational endeavors and further reducing its debt burden.

"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.

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Marroco further added, "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."

"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.

In a statement, BAT affirmed its full support for ITC's management team, performance, and strategy, acknowledging ITC's substantial contribution to its shareholders as one of India's foremost FMCG enterprises.