B Mirror Report

Multinational tobacco firm British American Tobacco (BAT) has revealed its decision to divest its 2.3 percent shares in the Indian consumer goods powerhouse ITC. The company is looking to generate approximately $1.4 billion through this block trade, which is a significant one-time transaction.

In a statement released on May 27, BAT indicated that following this share sale, it will still hold a 23.1 percent stake in ITC, ensuring that it remains a key investor in the company. This crucial transaction is being facilitated by the international investment banks Goldman Sachs and Citigroup.

As reported by Reuters, BAT has the capacity to issue up to 290 million shares. The minimum price for these shares has been established at 400 taka each, which is roughly 7.8 percent below the current market value. This marks the second significant block deal in India this week, following IndiGo Airlines co-founder Rakesh Gangwal’s sale of a 5.7 percent stake for around $1.36 billion.

BAT has stated that the funds raised from this transaction will contribute an additional £200 million to its £1.1 billion share buyback initiative planned for 2025. The company is optimistic that this transaction will not adversely affect its annual revenue projections.

Earlier in 2023, BAT had sold approximately 3.5 percent of its stake in ITC for about $2 billion, which is recognized as the third-largest block deal in the history of India.

Notably, in February of this year, BAT had projected only a 1 percent growth in annual revenue, attributing this to tax pressures and ‘tax headwinds’ faced in Bangladesh and Australia.