ITC’s top shareholder BAT to sell 3.5% stake for $2bn

Year’s Biggest Block Deal to Help Boost Co’s Weight in Sensex

Partha Sinha & Udit Prasanna Mukherjee

Mumbai/Kolkata: British American Tobacco, one of the World’s largest tobacco products companies that is also the biggest shareholder in tobacco to FMCG major ITC, is selling about 3.5% stake in the Indian conglomerate aiming to garner about Rs 16800 crore. London-headquartered BAT will sell nearly 44 crore shares of ITC at a price band of Rs 384-400 through block deals on Wednesday, the deal’s term sheet showed. At the lower end of the price at a 5% discount to the stock’s Tuesday close on the BSE at Rs 404.

ITC’s block deal will be one of the largest in India. The biggest block deal in India was executed in May 2020 when global pharma major GSK had sold 5.7% in FMCG major HUL for about Rs 25600 crore.

BAT holds a little over 29% stake in ITC but it is not the promoter of the company. BAT’s top management has been talking about monetizing part of its stake in ITC for three to four months, provided it could successfully navigate India’s strict foreign holding rules in tobacco companies. BAT had indicated that its’s holding in ITC would not fall below the strategically important 25% mark. They (BAT) will continue to remain a major shareholder in ITC.

On Tuesday evening, BAT through a statement said that after completion of this block trade.” BAT will remain a significant shareholder of ITC, with about 25.5% holding.

The global tobacco major intends to part with its proceeds form stake sale in ITC to pay dividend this and the next year, “starting with 770 million pounds in 2024.