Britain-based tobacco player British American Tobacco, the biggest shareholder of India’s top cigarettes maker ITC Ltd, is planning to divest its stake in newly spun-off entity ITC Hotels by 2026.
“BAT has no interest in becoming a long-term shareholder of a hotel chain in India. And as a consequence, at the right moment, when we decide the best time to maximise shareholder value, we will be divesting,” said Tadeu Marroco, the CEO in a post earnings call with analysts.
British American Tobacco holds as 15.3 percent stake in ITC Hotels as of December 2024.
Earlier in 2024, British American Tobacco's management had said, “There is no strategic intent from BAT to be a minority shareholder of a hotel company in the Indian market. The decision on this (monetization of hotel biz stake) will be taken by the board when the time comes.”
British American Tobacco (BAT) sold a 3.5 percent stake in ITC in a Rs 17,491-crore deal on March 13, 2024. The share sale cut the holding of BAT in ITC shares to about 25.5 percent from 29 percent. This enabled the initiation of BAT's sustainable share buyback, starting with £700 million in 2024 and £900 million in 2025.
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Last year, ITC decided to demerge its Hotels business into a separate listed entity to unlock value for shareholders. It fixed the demerger ratio at 1:10, which meant that shareholders holding 10 shares of ITC would receive one share of ITC Hotels post the demerger.
Under the scheme of demerger, ITC Hotels issued equity shares directly to the shareholders of ITC in a manner that about 60 per cent stake is held directly by ITC shareholders proportionate to their shareholding in ITC and the remaining about 40 per cent stake to continue with ITC, it said.
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