British American Tobacco (BAT), the largest shareholder of India’s leading cigarette manufacturer ITC Ltd, has announced plans to divest its stake in ITC Hotels by 2026. The decision is part of BAT’s broader strategy to focus on its core business and maximise shareholder value.
BAT’s CEO, Tadeu Marroco, stated in a post-earnings call that the company does not intend to be a long-term shareholder in an Indian hotel chain. “At the right moment, when we determine the best time to maximise shareholder value, we will be divesting,” he said.
As of December 2024, British American Tobacco holds a 15.3 percent stake in ITC Hotels. The company had previously made it clear that it has no strategic intent to retain a minority stake in a hotel business in India. The final decision on monetizing its stake will be taken by the board at an appropriate time.
Earlier in March 2024, BAT reduced its stake in ITC Ltd by selling 3.5 percent of its holdings in a ₹17,491-crore deal. This brought down its stake in ITC to approximately 25.5 percent from 29 percent. The sale allowed BAT to initiate a sustainable share buyback program, starting with £700 million in 2024 and £900 million in 2025.
ITC had demerged its Hotels business in 2023 to unlock value for shareholders, offering a demerger ratio of 1:10—meaning investors received one share of ITC Hotels for every ten shares of ITC they held. As per the demerger scheme, ITC Hotels issued equity shares directly to ITC shareholders, with around 60 percent of the stake now held by ITC investors proportionate to their holdings, while the remaining 40 percent remains with ITC Ltd.
BAT’s exit strategy from ITC Hotels will depend on market conditions and its objective of optimising shareholder returns.
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Source: Moneycontrol
