ITC shares sink 3% as BAT offloads 2.5% equity for Rs 12,100 crore in a block deal

ITC shares sink 3% as BAT likely offloads 2.6% equity for Rs 13,300 crore in a block deal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Cigarette-to-FMCG conglomerate ITC Ltd's shares sank over three percent in early trade on Wednesday, May 28 following a block deal, with British American Tobacco Plc (BAT) likely trimming its stake in the consumer staples giant.

Around 3.13 crore shares, or 2.5 percent of equity in ITC was exchanged in a block deal window, totalling Rs 12,100 crore in total. The shares were exchanged at the price of Rs 417 per share, which indicates a four percent discount from the previous session's close.

At 12.30 pm, ITC shares were quoting Rs 420.7, lower by 3 percent on the NSE.

"The net proceeds from the block trade will also be utilised to extend the group's existing share buyback programme announced on 18 March 2024 (the "Programme") by an additional £200 million, taking the total amount to be repurchased in 2025 to £1.1 billion," said BAT, in a filing with the London Stock Exchange.

Earlier, reports suggested that ITC's largest shareholder BAT will likely offload 2.3 percent of its stake in ITC to institutional investors via the block deal method, marking its second such sale, after selling a 3.5 percent stake through block deals for Rs 16,690 crore last year.

Investment banks Citi and Goldman Sachs are working on the proposed transaction, noted industry sources. With the floor price of Rs 400 per share, the total size of the block deal will valued around $1.36 billion or Rs 11,600 crore.

Following the block deal, BAT will remain a large shareholder of ITC, holding a 23.1 percent stake in the diversified conglomerate.

Follow our market blog to catch all the live updates

The transaction will provide BAT with increased financial flexibility as it delivers on its commitment to invest in transformation, deleverage and sustainable shareholder returns.

In a press release, BAT said, “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.”

If completed, the proceeds will be used to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor (adjusted for Canada) by the end of 2026 and to continue our sustainable buyback program by enabling an intended £200 million increase in the share buyback to a total of £1.1 billion in 2025.

Tadeu Marroco, chief executive of BAT, said "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 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."

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.