British American Tobacco Trims ITC Stake By 2.3% Via ₹11,613 Crore Block Deal, Retains 23.1% Holding In Indian Conglomerate
New Delhi: British multinational BAT Plc on Wednesday trimmed its stake in conglomerate ITC by 2.3 per cent through a block deal worth Rs 11,613 crore (USD 1.36 billion), according to the deal terms accessed by PTI.
After the stake sale, shares of ITC slipped 1.46 per cent to trade at Rs 419.85 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.
As per the block deal, up to 29 crore equity shares of ITC were sold at a floor price of Rs 400 per share. This represents a discount of about 7.8 per cent to ITC's closing price of Rs 433.90 on the National Stock Exchange (NSE) on Tuesday, sources said.
Goldman Sachs (India) Securities Pvt Ltd and Citigroup Global Markets India are the placement agents for the transaction, they added.
The sources said 29 crore shares amount to around a 2.3 per cent stake in the company. At the offer floor price, the total size of the transaction is pegged at Rs 11,613 crore or (USD 1.36 billion).
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 announced that its wholly-owned subsidiary Tobacco Manufacturers (India) Ltd intends to sell 2.3 per cent of the issued ordinary share capital 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.
Following completion of the block trade, BAT will remain a significant shareholder of ITC, with a 23.1 per cent holding in FMCG-to-hotel conglomerate ITC, it added.
"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, British multinational BAT Plc on Wednesday 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.
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