British American Tobacco sells 2.5% stake in ITC for Rs 12,927 crore

New Delhi: British multinational BAT Plc on Wednesday trimmed its ownership in conglomerate ITC by divesting a 2.5 per cent stake for Rs 12,927 crore ($1.51 billion) through a block deal, according to a revised term sheet accessed by PTI.

Following the stake sale, shares of ITC went lower by 1.15 per cent to trade at Rs 421.15 apiece on the NSE.

British American Tobacco (BAT), through its arm Tobacco Manufacturers (India) Ltd, sold the stake in Kolkata-based ITC.

Before the latest transaction, BAT through its affiliates -- Rothmans International Enterprises, Myddleton Investment Company and Tobacco Manufacturers (India) Ltd -- owned a combined 25.44 per cent stake in ITC Ltd.

Following the completion of the block trade, BAT will remain a significant shareholder of ITC, with less than 23 per cent stake in FMCG-to-hotel conglomerate ITC.

As per the latest block deal, up to 31.3 crore equity shares of ITC were sold at a final price of Rs 413 per share. This represents a discount of about 4.8 per cent to ITC's closing price of Rs 433.90 on the National Stock Exchange (NSE) on Tuesday, as per a revised term sheet seen by PTI.

Goldman Sachs (India) Securities Pvt Ltd and Citigroup Global Markets India are the placement agents for the transaction, sources said.

The total number of shares has been raised from the initial 290 million (29 crore shares) as mentioned in the earlier term sheet.

The sources said 31.3 crore shares amount to around 2.5 per cent stake in ITC, and the offer size, based on the final price, is pegged at $1.51 billion or about Rs 12,927 crore.

The shares sale executed through multiple tranches on the BSE and NSE under the bulk sale route. The share sale is entirely secondary in nature, meaning that ITC will not receive any proceeds from the deal, and the stake is being sold solely by the Tobacco Manufacturers (India) Ltd. The seller and its affiliates will be subject to a lock-up period of six months post-sale.

In a regulatory filing on the London Stock Exchange, BAT plc on Tuesday said that its wholly-owned subsidiary Tobacco Manufacturers (India) Ltd intends to sell stakes in ITC Ltd.

The transaction will provide BAT with increased financial flexibility as it delivers on its commitment to invest in transformation, deleverage and sustainable shareholder returns.

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.

"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 Chief Executive Tadeu Marroco said.

In March 2024, BAT Plc sold a 3.5 per cent stake in ITC Ltd for Rs 17,485 crore.

BAT is in the 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.