BAT Offloads 3.5% Stake in ITC Through ₹17,491 Crore Block Deal

13 Mar 2024 , 09:21 AM

On March 13, a significant block deal took place involving around 43.7 Crore shares of ITC, constituting a 3.5% stake in the diversified conglomerate. The transaction amounted to ₹17,491 Crore and was executed at an average price of ₹400 per share.

The seller in this block deal was British American Tobacco (BAT), which is the largest shareholder of ITC. The shares were sold at a slight discount of 0.04% compared to the previous session’s closing price of ₹401.9.

BAT had announced its intention to sell up to 43.69 Crore ITC shares through accelerated book building at a price range of ₹384 to ₹400.25 per share, as reported by CNBC Awaaz on March 12.

Sources indicated that Capital International or GIC Singapore might acquire a stake in ITC, with domestic funds such as ICICI Prudential MF and Aditya Birla Mutual Fund also expressing significant interest in the block deal. Other long-only funds and certain insurance funds have also shown interest, according to sources.

The sale of shares will reduce the holding of ITC’s largest shareholder from approximately 29% to around 25.5%. BAT will have to wait for 180 days before further reducing its stake.

On March 12, following reports of BAT’s planned stake sale, ITC shares closed 1.83% lower at ₹401.9 on the NSE.

BAT’s association with ITC dates back to the early 1900s. Despite the divestment, BAT expressed full support for ITC’s management team, performance, and strategy.

However, BAT faced challenges in offloading its stake in ITC due to regulatory hurdles imposed by the Reserve Bank of India on foreign ownership in tobacco firms. These restrictions limit the pool of potential buyers for ITC shares, making the divestment process complex and bureaucratic, as highlighted by BAT CEO Tadeu Marroco in December.