British American Tobacco (BAT), through its wholly-owned subsidiary Tobacco Manufacturers (India) Limited, has announced its intention to sell approximately 2.3% of the issued ordinary share capital in ITC Limited. The sale will be conducted via an accelerated bookbuild process and is targeted at institutional investors.
Key Highlights
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The transaction should enhance financial flexibility for BAT as it continues to invest in transformation and sustainable returns to shareholders.
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BAT intends to utilize the secured funds to reach its target leverage corridor of 2.0- 2.5x adjusted net debt/adjusted EBITDA by the end of 2026.
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BAT also plans to utilize approximately £200 million proceeds to expand its share buyback programme to a total of £1.1 billion for 2025
Strategic Implications
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BAT has been a long-term shareholder in ITC Limited since the early 1900s, and following the sale, BAT will remain a shareholder with approximately 23.1% stake.
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The transaction is not anticipated to impact BAT’s financial guidance for 2025 or 2026, excluding the share buyback programme expansion.
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BAT management has confidence in ITC management and its ability to continue to deliver shareholder value.
Financial Position
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BAT generated revenue of £25.9 billion in 2024, with an adjusted profit from operations of £11.9 billion.
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As part of the turnaround strategy, BAT has goals of reaching 50 million adult consumers of smokeless products by 2030 and generating 50% of revenue from these products by 2035.
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BAT was also awarded Triple A in 2024 from CDP for its climate change, water and forests efforts.
Market Reaction
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Given the long-term relationship between BAT and ITC, investor interest in this transaction is high.
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The sale is part of BAT's overall plan of optimizing its financial position and enhancing shareholder value.
Source: Investing.com
Source: Investing.comBritish American Tobacco (BAT), through its wholly-owned subsidiary Tobacco Manufacturers (India) Limited, has announced its intention to sell approximately 2.3% of the issued ordinary share capital in ITC Limited. The sale will be conducted via an accelerated bookbuild process and is targeted at institutional investors.
Key Highlights
- The transaction should enhance financial flexibility for BAT as it continues to invest in transformation and sustainable returns to shareholders.
- BAT intends to utilize the secured funds to reach its target leverage corridor of 2.0- 2.5x adjusted net debt/adjusted EBITDA by the end of 2026.
- BAT also plans to utilize approximately £200 million proceeds to expand its share buyback programme to a total of £1.1 billion for 2025
Strategic Implications
- BAT has been a long-term shareholder in ITC Limited since the early 1900s, and following the sale, BAT will remain a shareholder with approximately 23.1% stake.
- The transaction is not anticipated to impact BAT’s financial guidance for 2025 or 2026, excluding the share buyback programme expansion.
- BAT management has confidence in ITC management and its ability to continue to deliver shareholder value.
Financial Position
- BAT generated revenue of £25.9 billion in 2024, with an adjusted profit from operations of £11.9 billion.
- As part of the turnaround strategy, BAT has goals of reaching 50 million adult consumers of smokeless products by 2030 and generating 50% of revenue from these products by 2035.
- BAT was also awarded Triple A in 2024 from CDP for its climate change, water and forests efforts.
Market Reaction
- Given the long-term relationship between BAT and ITC, investor interest in this transaction is high.
- The sale is part of BAT's overall plan of optimizing its financial position and enhancing shareholder value.
Source: Investing.com
