British American Tobacco Plc (BAT), known for its Lucky Strike cigarettes, is poised to initiate the sale of a portion of its stake in its Indian partner, ITC, as early as this week, according to media reports.
Reports suggest that London-listed BAT has been in discussions with Bank of America Corp. and Citigroup Inc. regarding a potential divestment of approximately USD 2 billion to USD 3 billion worth of ITC stock through block trades.
These transactions typically occur at a discount to the market price. However, specific details of the deal remain subject to change, and the launch of the offering might extend into the following week, contingent upon market conditions, the sources revealed on condition of anonymity.
Following the media reports, BAT shares experienced a surge of up to 2.5 per cent before stabilising at 1.5 per cent higher. Over the past 12 months, BAT shares have observed a decline of 23 per cent.
Presently, BAT holds approximately 29 per cent of ITC’s Mumbai-listed shares, as per data compiled by Bloomberg. Last month, the UK-based company disclosed its contemplation of monetising a segment of its holding.
ITC, a prominent Indian conglomerate, derives a significant portion of its revenue from the tobacco sector, alongside a diverse range of other businesses encompassing food products, packaging, and hospitality. The company is also in the process of spinning off its hotel business.
The anticipated selldown of BAT’s stake in ITC is poised to be a significant move in the global tobacco industry, with potential implications for both companies involved and the broader market. Investors are closely monitoring developments amidst expectations of further clarity on the deal specifics in the coming days.
