ITC shares drop 4% as BAT looks to sell 2.3% stake via block deal  

BAT, which manufactures and sells cigarettes, tobacco and other nicotine products including electronic cigarettes, plans to offload 29 crore shares at a floor price of ₹400 per share,

amounting to ₹11,600 crore. The floor price for the block deal is 7.8% lower than the previous closing price of ₹433.90 on the BSE.

Early today, ITC shares opened 3.6% lower at ₹418 on the BSE. Extending opening losses, the blue-chip stock declined as much as 4.3% to ₹415.10, with 1.40 crore shares worth ₹583 crore

changing hands over the counter compared to the two-week average of 7.7 lakh stocks.

At the time of reporting, shares of ITC were trading 3.45% lower at ₹418.95, while the market capitalisation slipped to ₹5.24 lakh crore. 

At the current price, ITC shares are 16.2% lower than its 52-week high of ₹500.01 touched on September 27, 2024, while the stock is up 10% from its 52-week low of ₹381.24 hit on June 4,

2023.

On Tuesday, BAT said that its wholly-owned subsidiary, Tobacco Manufacturers (India) or TMI, intended to sell 2.3% stake in ITC via a block trade deal, bringing down its stake to 23.1% in

the Indian conglomerate. The company proposes to use the capital proceeds to increase financial flexibility as it delivers on its commitment to invest in transformation, deleverage and

sustainable shareholder returns.

"Proceeds used to progress to within the target 2-2.5x adjusted net debt/adjusted Ebitda leverage corridor (adjusted for Canada) by the end of 2026 and to continue our sustainable buyback

programme by enabling an intended £200 million increase in the share buyback to a total of £1.1 billion in 2025," it said in a statement.

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.

Tadeu Marroco, Chief Executive of BAT, said 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."

In March 2024, BAT sold 3.5% stake in ITC for around ₹17,457 crore. The transaction involved 43.6 crore shares at an average price of ₹400.4 per share.

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