Shares of ITC Ltd fell 3.5% to ₹418.70 on Tuesday after British American Tobacco (BAT), the company’s largest shareholder, launched a substantial block deal to offload 2.57% stake in the FMCG major. The deal, which was earlier pegged at 2.3%, was upsized to 2.57%, representing 33.25 crore shares valued at ₹13,860 crore at ₹417 apiece.
In a disclosure made to the London Stock Exchange, BAT said its wholly-owned subsidiary Tobacco Manufacturers (India) Limited intends to sell the shares via an accelerated book-building process. The sale is aimed at providing BAT with increased financial flexibility as it progresses on transformation, deleveraging, and enhancing shareholder returns.
“ITC is a valued associate of BAT in an attractive growth market. While this transaction supports delivery on our commitments to BAT shareholders, we continue to view ITC as a core strategic investment,” said Tadeu Marroco, Chief Executive of BAT, in an official statement released on May 27, 2025.
The transaction will support BAT’s goal of reaching a 2.5x adjusted net debt/adjusted EBITDA leverage corridor by the end of 2026 and fund a £200 million increase in its share buyback programme. Despite the sale, BAT will retain a significant holding of approximately 23.1% in ITC.
The market reaction was swift, with ITC shares slipping as investors digested the overhang from the large secondary sale. BAT had initially invested in ITC over a century ago and has maintained a beneficial relationship with the Indian conglomerate, which remains one of the country’s leading FMCG enterprises.
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