BAT sells 3.5% ITC stake at Rs 400 per share for Rs 17.5k crore; stock jumps 6%

British American Tobacco, the largest ITC shareholder, sold 43.7 crore shares, accounting for 3.5 percent stake, in the company at Rs 400 apiece.

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British American Tobacco (BAT) has sold a 3.5 percent stake in ITC in a Rs 17,491-crore block deal on March 13 morning.

BAT, the largest ITC shareholder, sold around 43.7 crore shares, at an average price of Rs 400, which was at a 0.01 percent discount to the previous session’s closing price of Rs 404.45.

At 9.35 am, shares of ITC were quoting Rs 429.9 apiece on the NSE, higher by 6.3 percent on the NSE.

The British cigarette maker planned to sell up to 43.69 crore ITC shares via accelerated book building at Rs 384-400.25 a share, CNBC Awaaz reported on March 12.

Capital International or GIC Singapore may buy stake in ITC, said sources to CNBC Awaaz. Additionally, domestic funds such as ICICI Prudential MF and Aditya Birla Mutual Fund have shown key interest in the block deal. Other long-only and certain insurance funds have also showcased some interest, per sources.

The share sale will cut the holding of ITC’s single-largest shareholder to about 25.5 percent from about 29 percent. BAT will have to wait for 180 days before paring its stake further.

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On March 12, ITC shares closed 1.83 percent lower at Rs 401.9 on NSE following reports that BAT would launch the stake sale during the week.

BAT’s initial investment in ITC dates back to the early 1900s. “As one of India’s leading FMCG enterprises, ITC has delivered significant value for its shareholders and BAT continues to be fully supportive of ITC’s management team, performance and strategy,” BAT said.

Also Read | BAT to sell 3.5% ITC stake for Rs 16,775 crore; offers shares at 5% discount

A key challenge BAT had faced in offloading stake in ITC is navigating the regulatory hurdles imposed by the Reserve Bank of India on foreign ownership in tobacco firms, which limits who can buy those shares.

The complexity of divesting ITC’s shares was immense, BAT CEO Tadeu Marroco said in in December.

“There are specific RBI approvals that are required in respect of any action-taking about our stake, and this adds a significant level of additional bureaucracy,” he said. As a result, “the universe of buyers is limited” for ITC shares, he said.

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