BAT confirms sale of 400m shares in India's ITC

British American Tobacco confirmed extensive media speculation around its holding of Indian tobacco firm ITC on Tuesday morning, announcing plans to sell more than 400 million ITC shares through its subsidiary Tobacco Manufacturers India (TMI).

The FTSE 100 company said it would sell up to 436,851,457 shares, representing 3.5% of ITC’s issued share capital, via an accelerated bookbuild.

It said ITC - one of India's foremost fast-moving consumer goods specialists - had consistently delivered significant value to its shareholders.

BAT reaffirmed its full support for ITC's management team, performance, and strategic direction.

On completion of the proposed block trade, BAT said it would maintain a substantial 25.5% stake in ITC.

The company said the net proceeds from the trade were earmarked for the repurchase of BAT shares in a process scheduled to continue until December 2025, with an initial allocation of £700m in 2024.

BAT said it planned to use operating cash flow to fuel investments in its transformation efforts and further reduce debt.

It said its future capital allocation strategy would revolve around several key pillars, including sustained investment in its transformation initiatives, progressive dividends, continued debt reduction to achieve a new range of 2x to 2.5x adjusted net debt-to-adjusted EBITDA, and sustainable share buybacks.

“I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders,” said BAT chief executive officer Tadeu Marroco.

“We look forward to remaining important shareholders in ITC as it continues its journey of growth.

“With this transaction, BAT can accelerate the start of a sustainable buyback, while enabling us to continue to deleverage towards a new target range of 2x to 2.5x adjusted net debt to adjusted EBITDA.”

At 1213 GMT, shares in British American Tobacco were up 3.06% at 2,390p.

Reporting by Josh White for Sharecast.com.