British American Tobacco to Sell 2.3% Stake in ITC Ltd for $1.36 Billion

Strategic Insights -

British American Tobacco (BAT) has announced plans to sell 2.3% of its stake in Indian multinational conglomerate ITC Ltd to institutional investors for $1.36 billion. This move is part of the company's commitment to deliver on its commitments to invest in transformation, deleverage, and sustainable shareholder returns. Despite the sale, BAT will continue to be the largest shareholder of ITC, holding 23.1% of the company's shares.

Key Takeaways:

  • BAT will sell 2.3% of its stake in ITC Ltd to institutional investors for $1.36 billion.
  • The sale is part of the company's commitment to deliver on its commitments to invest in transformation, deleverage, and sustainable shareholder returns.
  • BAT will continue to hold 23.1% of ITC Ltd's shares, making it the largest shareholder.
  • The sale will result in BAT losing its veto power in ITC Ltd, which it had held for decades.
  • The transaction will enable BAT to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor by the end of 2026.
  • ITC Ltd's stock closed at Rs 433.9 on BSE, down by 2.01% or Rs 8.9 a share.
  • BAT is offering shares at Rs 400 a share, a discount of 7.8% from Tuesday's close.
  • This is the second instance in as many years when BAT is selling shares in ITC Ltd.
  • The initial investment in ITC Ltd by BAT dates back to the early 1900s, and the two companies have a longstanding, mutually beneficial relationship.
  • With the proceeds of the stake sale, BAT plans to continue its sustainable share buyback program by enabling a $200m increase in the share buyback to a total of $1.1 billion in 2025.

Statistics:

  • BAT will sell 2.3% of its stake in ITC Ltd for $1.36 billion.
  • The sale is expected to take place at Rs 400 a share, a discount of 7.8% from Tuesday's close.
  • ITC Ltd's stock closed at Rs 433.9 on BSE, down by 2.01% or Rs 8.9 a share.
  • BAT will hold 23.1% of ITC Ltd's shares, making it the largest shareholder.
  • The transaction will enable BAT to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor by the end of 2026.
  • BAT's initial investment in ITC Ltd dates back to the early 1900s.

Sources:

  • Regulatory filing with the London Stock Exchange on Tuesday evening.
  • ABP Private Limited, distributed by Contify.com (2025).