Shares of ITC Ltd dropped more than 3% in early trade on May 28 after a large block deal took place. British American Tobacco (BAT), the company’s largest shareholder, likely sold around 2.6% of its stake in the FMCG and cigarette major, raising approximately ₹13,334 crore.
Nearly 32 crore ITC shares changed hands in the block deal window at ₹417 per share. This price is about 4% lower than the stock’s previous closing price. At 9:20 AM, ITC shares were trading at ₹417.6 on the NSE, down 3.8%.
This is the second time BAT has sold a part of its stake in ITC. Last year, it had sold 3.5% stake through a block deal, earning around ₹16,690 crore. With this latest sale, BAT’s total holding in ITC will come down to 23.1%. Despite the reduction, BAT still remains a major shareholder in the company.
The deal is being handled by investment banks such as Goldman Sachs and Citi. The reports indicated the deal’s floor price had been set at ₹400 per share, and the deal’s overall size was almost ₹11,600 crore, which is about $1.36 billion.
The move is one of the company’s plans to control its debt as well as invest in other sectors, the tobacco firm said. The earnings will bring the firm closer towards its vision of decreasing its debt as well as boosting shareholder returns. The company also expects to increase the share buyback scheme to £1.1 billion in 2025.
BAT confirmed in a press note that it is planning to sell a small amount of ITC shares to the market, however, noted that the deal is not finalized as yet. According to Tadeu Marroco, the CEO of BAT, ITC is an integral part of long-term plans of the company globally and particularly in a huge market of India.
He termed ITC a solid partner with good growth prospects and is optimistic that the existing management will continue to unlock value for the shareholders.
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Source: Moneycontrol
News Desk
