BAT Sells ₹12,100-Crore Stake in ITC via Block Deal
In a significant transaction, British American Tobacco (BAT), via its wholly-owned subsidiary Tobacco Manufacturers (India), has offloaded a 2.5% stake in ITC worth ₹12,926.90 crore through a block deal. The deal, which was executed at ₹413 apiece, translates to a total of 31.3 crore shares being traded. Interestingly, this sale comes with a 4.8% discount from ITC’s previous close.
Although BAT has reduced its stake in ITC, it remains the largest shareholder of the company, holding a substantial 23.1% stake. Moreover, the company has announced its plans to increase its share buyback program, indicating its commitment to the Indian market and its confidence in ITC’s growth prospects.
The block deal, which was executed on a single day, represents a significant chunk of ITC’s total market capitalization. ITC, one of India’s largest conglomerates, has a market capitalization of over ₹5.5 lakh crore. The sale of 2.5% stake in ITC is equivalent to about 12.5% of the company’s total market capitalization.
The block deal was executed at a price of ₹413 apiece, which is 4.8% lower than ITC’s previous close of ₹435.15. The transaction was reportedly executed through the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
The sale of BAT’s stake in ITC is a significant development in the Indian corporate landscape. BAT’s decision to offload a portion of its stake in ITC is seen as a strategic move to optimize its portfolio and redeploy capital elsewhere. The company has been focusing on expanding its presence in the global tobacco market, particularly in emerging economies.
Despite the sale, BAT remains a significant shareholder of ITC, holding a substantial 23.1% stake in the company. This stake gives BAT significant influence over ITC’s operations and strategic decisions. ITC, on the other hand, is one of India’s largest and most diversified conglomerates, with a presence across various sectors, including FMCG, paper, hospitality, and agriculture.
The block deal is also seen as a vote of confidence in ITC’s growth prospects. Despite facing challenges in the Indian market, ITC has been consistently delivering strong financial performance and has a strong track record of dividend payouts. The company has a robust portfolio of brands, including Wills, Lucky Strike, and FMCG brands like Sunfeast and Aashirvaad.
In conclusion, the sale of BAT’s stake in ITC is a significant development in the Indian corporate landscape. Although BAT has reduced its stake in ITC, it remains the largest shareholder of the company and plans to increase its share buyback program. The block deal is seen as a strategic move by BAT to optimize its portfolio and redeploy capital elsewhere, while also indicating its confidence in ITC’s growth prospects.
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