ITC’s share price jumped more than 8 percent on March 13 after British American Tobacco sold a $2 billion stake in the Indian conglomerate, reports Reuters.
The share price had initially fallen in the wake of BAT’s original announcement, as investors were uncertain of the transaction’s conditions.
The sale of 436.9 million shares, representing about 3.5 percent of ITC’s outstanding shares, still leaves BAT with a stake of more than 25 percent in the company.
Cigarettes are ITC’s largest business, accounting for more than 40 percent of its revenue. The company has been working to consolidate its business, with plans to spin off its hotel business.
BAT said it intends to use the net proceeds to buy back BAT shares over a period ending December 2025, starting with £700 million in 2024. “This will enable the allocation of operating cashflow to fund investment in our transformation, continue to deleverage towards our new target range of 2-2.5x adjusted net debt/adjusted EBITDA, while also maintaining a progressive dividend and supporting a sustainable share buyback,” the company wrote on its website.