BAT's 2.3% stake sale in ITC keeps shares subdued, experts warn

British American Tobacco's recent $1.36 billion block sale of a 2.3% stake in ITC triggered a nearly 5% drop in ITC shares, dragging down key Indian indices. Market strategists predict continued pressure on ITC stock as BAT remains the largest shareholder but reduces its exposure.

Sources:
NDTV ProfitLivemintCnbctv18+9
Updated 35m ago
Sources: News18MoneyLivemint+4
British American Tobacco plc (BAT) announced plans to sell a 2.3% stake in Indian tobacco and FMCG conglomerate ITC Limited through an accelerated bookbuild process, valuing the transaction at approximately $1.36 billion.

The sale involves offering up to 290 million shares at a base price of 400 rupees ($4.69) per share, representing 2.3% of ITC's total outstanding shares. Following the transaction, BAT's holding in ITC will reduce from 25.45% to 23.1%, maintaining its position as a significant shareholder.

This move follows BAT's earlier divestment of a 3.5% stake in ITC last year for around $2 billion. BAT's CEO, Tadeu Marroco, emphasized ITC's value as an associate in a high-growth market, stating, "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."

Market reaction was immediate, with ITC shares tumbling nearly 5%, becoming the biggest laggard on the BSE Sensex. The stock dropped 4.33% to Rs 415.10 on the BSE and 4.81% to Rs 413 on the NSE.

Experts warn that BAT's stake sale will keep ITC shares subdued. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted, "BAT's decision to sell 2.3 per cent stake in ITC will keep the stock subdued."

BAT plans to use the proceeds to increase its share buybacks by £200 million, totaling £1.1 billion in 2025. This strategic stake reduction aligns with BAT's broader portfolio management, including intentions to divest from ITC Hotels.

The transaction underscores BAT's ongoing recalibration of its investment in ITC amid evolving market dynamics and investor sentiment.
Sources: News18Money+1
British American Tobacco (BAT) plans to sell a 2.3% stake in Indian tobacco giant ITC Ltd through a $1.36 billion block trade, reducing its holding from 25.45% to 23.1%. Experts warn this move has kept ITC shares subdued, with the stock tumbling over 4% following the announcement.
Section 1 background
The Headline

BAT sells 2.3% ITC stake; shares fall nearly 5%

"BAT’s decision to sell 2.3 per cent stake in ITC will keep the stock subdued."
VK Vijayakumar
Chief Investment Strategist
Money
Key Facts
  • British American Tobacco (BAT) announced plans to sell 2.3% of ITC's shares via an accelerated bookbuild/block trade valued at $1.36 billion.44News18+1
  • The block deal involved selling up to 290 million shares at a base price of 400 rupees ($4.69) per share.1
  • Following the sale, BAT's holding in ITC dropped from 25.45% to approximately 23.1%, with some reports indicating it could slip to 18% depending on total holdings considered.2NDTV Profit
  • The stake sale caused ITC shares to tumble nearly 5%, with the stock falling as much as 4.81% on NSE and 4.33% on BSE, becoming the biggest laggard on the Sensex.Money
  • The Indian benchmark indices Nifty and Sensex were dragged lower on the day of the sale, with ITC's decline cited as a key factor.MoneycontrolReuters2
Key Stats at a Glance
Value of BAT's stake sale in ITC
$1.36 billion
1
Percentage of ITC shares BAT plans to sell
2.3%
News18
Number of shares offered by BAT
290 million shares
1
Base price per share
400 rupees
1
Base price per share in USD
$4.69
1
BAT's stake in ITC before sale
25.45%
1
BAT's stake in ITC after sale
23.1%
1
ITC shares decline after BAT stake sale
5%
Money
ITC share price decline on BSE
4.33%
Money
ITC share price decline on NSE
4.81%
Money

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Section 2 background
Background Context

BAT's prior stake and strategic divestments in ITC

"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."
Tadeu Marroco
Chief Executive of BAT
1
Key Facts
  • Prior to recent sales, BAT held a 25.45% stake in ITC Ltd through its affiliates including Rothmans International Enterprises, Myddleton Investment Company, and Tobacco Manufacturers (India) Ltd.Money2
  • Nearly a year ago, BAT sold around 3.5% of its stake in ITC for about $2 billion.1
  • BAT's chief executive, Tadeu Marroco, stated that the firm will divest its stake in ITC Hotels 'at the right moment' and that BAT has no interest in becoming a long-term shareholder of a hotel chain in India.1
  • BAT plans to use the proceeds from the stake sale to increase its share buybacks by £200 million to a total of £1.1 billion in 2025.Livemint
Key Stats at a Glance
BAT's stake in ITC as of March 31, 2025
20.31%
NDTV Profit
Potential BAT stake in ITC after sale
18%
NDTV Profit
Previous BAT stake sale percentage in ITC
3.5%
1
Value of previous BAT stake sale in ITC
$2 billion
1
Increase in BAT's share buybacks
£200 million
Livemint
Total planned share buybacks by BAT in 2025
£1.1 billion
Livemint
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