Shares of ITC Ltd experienced a sharp drop of more than 3% during early trading hours on Wednesday, May 28, amid reports of a significant block deal involving British American Tobacco Plc (BAT). The decline followed market buzz that BAT, ITC’s largest shareholder, plans to trim its stake in the conglomerate, which spans the cigarette and FMCG sectors.
Roughly 32 crore shares, representing 2.56 per cent of ITC’s equity, changed hands through a block deal window, amounting to a total transaction value of Rs 13,334 crore, reported Moneycontrol. The shares were exchanged at Rs 417 apiece, reflecting a 4 per cent markdown from the stock’s closing price in the previous session. By 9:20 AM, ITC shares were trading at Rs 417.6 on the NSE, down 3.8 per cent.
Second Major Stake Sale by BAT
This move appears to be BAT’s second large-scale stake reduction in ITC in recent times. In 2024, BAT had sold a 3.5 per cent stake through a similar mechanism, raising Rs 16,690 crore. The current deal was reportedly arranged with support from investment banks Citi and Goldman Sachs. Although earlier reports indicated a 2.3 per cent stake sale, the actual transaction ended up slightly higher at 2.56 per cent.
The floor price for the shares in this round of divestment was set at Rs 400 per share. That pricing implied a deal value close to $1.36 billion or approximately Rs 11,600 crore. Despite the sell-off, BAT will retain a 23.1 per cent holding in ITC, maintaining its position as a major shareholder in the diversified enterprise.
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BAT Seeks Financial Flexibility While Retaining Strategic Interest
The deal aligns with BAT’s broader strategic objectives. According to a company press release, “BAT confirms that it is evaluating a possible disposal of a small part of BAT’s shareholding in ITC by means of an on-market trade. There can be no certainty that any such transaction will proceed, nor can there be any certainty as to the terms of any potential transaction. A further announcement will be made if and when appropriate.”
BAT intends to channel the proceeds from the sale into several financial goals, including reducing leverage and supporting its ongoing transformation plans.
Tadeu Marroco, Chief Executive Officer of BAT, emphasised the strategic value of ITC in the company’s global operations. “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,” he said.
Marroco added, “Whilst this transaction supports delivery on our commitments to BAT shareholders, we continue to view ITC as a core strategic component of our global footprint as we partner on business opportunities in India. I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders.”
