British American Tobacco to Divest Stake in ITC: A Multi-Billion Dollar Move

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– BAT plans to sell up to $2.1 billion shares in ITC.

– Offering 436.9 million shares at 384-400.25 rupees each, up to 5% discount.

– BAT owns about 29% of ITC, and aims to optimise its portfolio.

– ITC, a conglomerate, is diversifying away from tobacco.

– Sale facilitated by Bank of America and Citigroup.

– BAT shares up, ITC shares slightly down post-announcement.

– Move reflects BAT’s strategy for agility and portfolio management.

British American Tobacco Plc (BAT), renowned for its iconic Lucky Strike cigarettes, is making headlines with its strategic decision to divest a portion of its stake in ITC Ltd, one of India’s leading conglomerates. Here are the key details:

  1. The Stake Sale: BAT is planning to sell as much as $2.1 billion worth of shares in ITC through a block trade. This move signifies BAT’s intent to monetize part of its holding in the Indian company.
  2. The Numbers: London-listed BAT will offer 436.9 million shares at a price range of 384 rupees to 400.25 rupees per share. This represents a potential discount of up to 5% from ITC’s closing price on the previous day.
  3. BAT’s Current Ownership: BAT currently owns approximately 29% of Mumbai-listed ITC. The divestment aims to optimise its portfolio and unlock value.
  4. ITC’s Diverse Business: ITC, apart from being a major player in the tobacco industry, operates various other businesses, including food products, packaging, and hotels. The company is in the process of spinning off its hotel business.
  5. Bank of America and Citigroup: These two financial giants—Bank of America Corp. and Citigroup Inc.—are facilitating the sale on behalf of BAT1. Their involvement underscores the significance of this transaction.
  6. Market Impact: While BAT’s shares rose in London, ITC’s stock experienced a slight decline. Investors are closely watching how this divestment will play out in the market.

In summary, BAT’s move to sell a substantial stake in ITC reflects its strategic realignment and capital optimization. As the tobacco industry evolves, BAT’s decision underscores the need for agility and adaptability in managing global portfolios.

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