ITC Shares in Spotlight as British American Tobacco Plans Stake Reduction to Raise $2.5 Billion

13 Feb 2024 , 10:47 AM

ITC Ltd shares, experiencing a 13% decline in the past month, will be closely watched following reports that British American Tobacco (BAT) plans to reduce its stake in the company.

BAT, the major shareholder with a 29.03% stake in ITC as of the December quarter, is reportedly collaborating with Bank of America and Citi to sell 3.5-4% of its stake, aiming to raise up to  ₹21,000 Crore ($2.5 billion).

At the end of December, BAT’s total stake in ITC was valued at ₹1.47 Lakh Crore, based on ITC’s market capitalization of ₹5.08 Lakh Crore.

The potential stake reduction by BAT may assist in lowering leverage and potentially revive a share buyback program, as per the sources cited in the report.

In its preliminary results for the year ended December 31, BAT mentioned its continuous efforts to enhance balance sheet flexibility, acknowledging the opportunity to release and reallocate capital from its significant shareholding in ITC.

BAT, which sells cigarettes under various brands, including Kent, Lucky Strike, and Dunhill, has been actively working to complete the regulatory process necessary for monetizing part of its ITC shareholding, with updates promised at the earliest opportunity.

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