BAT launches 3.5% ITC stake sale via block trade, to hold 25.5% stake after deal: Report

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London-listed British American Tobacco Plc will be selling 3.5% stake, which is around in $2.1 billion of shares, ITC Ltd via block trade to institutional investors. The makers of Lucky Strike cigarettes are offering 436.9 million shares at Rs 384 to Rs 400.25 each, as per a total deal size of Rs 16,775 crore, Reuters reported. That’s a discount of as much as 5% from Tuesday’s closing price for ITC.

The sale of 43.69 crore ordinary shares in ITC through a block trade, will cut the Dunhill cigarette maker’s shareholding to about 25.5% from about 29%, a report in CNBC Awaaz stated. BAT has a 180-day lock-in period to sell further stake in ITC.

BAT’s wholly owned subsidiary Tobacco Manufacturers (India) Limited wants to sell 43.68 crore shares of ITC to institutional investors using an accelerated bookbuild process, subject to customary closing conditions. BAT plans to buy back shares over a period ending December 2025.

“We look forward to remaining important shareholders in ITC as it continues its journey of growth,” Tadeu Marroco, CEO of BAT, said in a statement.

Earlier, BAT said it would use the proceeds of the sale to buyback BAT shares over a period ending December 2025, with about £700 million this year itself.

BAT, ITC’s single-largest shareholder, has hired Wall Street investment banks Bank of America and Citigroup to manage the share sale.

Recently, BAT said that a 25% stake in ITC should be sufficient to retain strategic influence, including veto rights.

BAT, which has been facing tough times due to a significant decline in cigarette volumes across its key markets, has a net debt of $40 billion. That is about three times of EBITDA and nearly 60% of the market cap.

Shares of ITC Ltd closed at Rs 404.25, down by 1.26%, on Tuesday.

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