BAT Works Towards Monetising Stake in ITC, Aims to Maintain Influence

British American Tobacco (BAT) has announced its intention to monetise a portion of its stake in Indian conglomerate ITC, while still maintaining a level of influence in the company. BAT currently holds a 29.03% stake in ITC, making it the largest shareholder. During a conference call, Tadeu Marroco, the CEO of British American Tobacco p.l.c., highlighted the need to enhance balance sheet flexibility and the opportunity to reallocate capital through the stake reduction. He stated that BAT has been actively working on the regulatory process required to achieve this goal and will provide updates in due course.

Marroco emphasized the historical association between BAT and ITC, dating back to the early 1900s. The shareholding has evolved over time due to share capital changes and regulatory restrictions. In order to maintain its influence, BAT wants to retain a minimum 25% stake, which grants veto rights. Given their current shareholding above 29%, BAT has room to reduce its stake in ITC. Marroco recognized ITC as a highly cash generative company and emphasized the positive impact of India’s economic recovery from the COVID-19 pandemic on ITC’s performance.

Following British American Tobacco’s announcement, the stock price of ITC experienced a decline of 4.04% on the BSE, closing at ₹414.45 per share. BAT’s share of ITC’s post-tax results increased by 19.8% to £616 million in 2023, reflecting the economic rebound in India. The synergy between the two companies continues to be a valuable asset for BAT, and maintaining an influence in ITC remains a priority.