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Business Standard
03-06-2025
- Business
- Business Standard
ITC stake strategic investment, not financial: BAT chief executive Marroco
Marroco also confirmed that BAT would keep its two directors on the ITC board so that it has an influence Ishita Ayan Dutt Kolkata British American Tobacco plc (BAT) still considers its holding in ITC a 'strategic investment,' Chief Executive Tadeu Marroco said on Tuesday, days after the UK-based tobacco giant trimmed its stake in the cigarettes-to-soap conglomerate. On May 28, BAT sold 2.5 per cent in ITC with net proceeds amounting to ₹12,941 crore. The sale reduced BAT's holding in ITC to 22.93 per cent. Responding to a question on how the ITC stake should be viewed during a post-results conference, Marroco said, 'The ITC stake is still for us a strategic investment. It's not a financial investment.' Expanding on the rationale, Marroco
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Business Standard
03-06-2025
- Business
- Business Standard
ITC stake strategic, not financial: BAT chief executive Tadeu Marroco
British American Tobacco plc (BAT) still considers its holding in ITC a 'strategic investment,' chief executive Tadeu Marroco said on Tuesday, just days after the UK-based tobacco giant trimmed its stake in the cigarettes-to-soap conglomerate. On May 28, BAT sold 2.5 per cent in ITC, with net proceeds amounting to Rs 12,941 crore. The sale reduced BAT's holding in ITC to 22.93 per cent. Responding to a question on how the ITC stake should be viewed during a post-results conference, Marroco said, 'The ITC stake is still for us a strategic investment. It's not a financial investment.' Expanding on the rationale, Marroco pointed to the size of the Indian market, the demographics, the potential GDP per capita growth, and highlighted that ITC is a very well-oiled and run company with leadership in distribution and cigarettes. 'We have a multi-layer relationship with ITC coming back for many years. As you know, we have some inter-party relations with them in leaf, in IT, and we have expectations that new category can be a big factor in the India market in the future. And we want to preserve, as a consequence, a relevant stake in ITC,' the BAT chief executive said. Marroco also confirmed that BAT would keep its two directors on the ITC board so that it has an influence. The partial monetisation of the ITC stake is to enable increased financial flexibility. 'This is basically a decision to allow us to have financial flexibility to beef up the buyback a bit more and at the same time ensure that we get to the leverage corridor that we are aiming for between 2–2.5x by the end of next year,' Marroco said during the call. This is the second instance in two years that BAT has sold a partial stake in ITC. In March 2024, BAT had sold 3.5 per cent to initiate its buyback programme. The sale brought its stake down to 25.44 per cent and generated net proceeds of £1.6 billion. The latest round has brought it down further to 22.93 per cent. A 25 per cent holding allows shareholders to influence or oppose resolutions, especially special resolutions that require 75 per cent of the votes cast to be in their favour. In 2023, Marroco had outlined the importance of having 'at least 25 per cent of shareholding in India' and said that it would enable BAT to keep board seats, veto resolutions of the company, and steer it to certain opportunities.
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Business Standard
28-05-2025
- Business
- Business Standard
BAT pares stake in ITC to 22.9%, relinquishes veto power in key move
BAT's latest stake sale trims its ITC holding below 25 per cent, ending veto rights just a year after it cited the importance of maintaining control through board influence British American Tobacco plc (BAT) has sold a 2.5 per cent holding in ITC, ceding veto power in the cigarettes-to-soap conglomerate. In an intimation to the London Stock Exchange (LSE) on Wednesday, the maker of Dunhill and Lucky Strike stated that it had completed the block trade of 313,000,000 ordinary shares in ITC Limited to institutional investors via an accelerated bookbuild process. The shares represent 2.5 per cent of ITC, and net proceeds from the sale amounted to Rs 12,900 crore. With this sale, BAT's holding is expected to be around 22.9 per cent. On Tuesday, while announcing the stake sale, BAT had said it would remain a significant shareholder of ITC with a 23.1 per cent holding. A 25 per cent holding enables shareholders to influence or oppose resolutions, especially special resolutions that require 75 per cent of the votes cast to be in favour. An email sent to BAT received a response referring to the exchange filing, with the company stating, 'no further comments will be provided at this time.' However, in 2023, during a Deutsche Bank – Global Consumer Conference, Tadeu Marroco, chief executive of BAT, had outlined the importance of having 'at least 25 per cent of shareholding in India.' He had said that a 25 per cent stake would allow BAT to retain board seats, veto company resolutions, and steer towards certain opportunities. But BAT had sold 3.5 per cent in ITC in March 2024 to initiate its buyback programme. That sale, which reduced its stake to 25.45 per cent, generated net proceeds of £1.6 billion after transaction costs and taxes, and was used to begin the buyback. Later that year, during Capital Markets Day, Marroco said about ITC, 'We have to be mindful that there is a foreign direct investment (FDI) ban in India, which means that if you sell, you don't come back.' According to Abneesh Roy, executive director and head of the research committee at Nuvama Institutional Equities, a holding below 25 per cent means BAT can no longer block special resolutions. 'Till date, we remember only once BAT has blocked a special resolution on ESOP. So, not a material thing,' he said. It was in 2018 that BAT used its veto power to block a special resolution granting stock options to employees of ITC and its subsidiaries. The plan received 63.49 per cent of votes in favour, short of the requisite 75 per cent majority. While 98.77 per cent of institutions voted in favour, 89.22 per cent of non-institutional public shareholders (which included BAT) voted against it. BAT had said at the time that it had made its position clear since 2010—that it would not support proposals that diluted shareholder value. This led ITC to adopt a new scheme, the Stock Appreciation Rights Scheme (SARS), which resulted in minimal additions to share capital. Since then, BAT's position appears to have shifted significantly, with the UK-based company paring its stake in ITC for the second time in two years. The turn of events is especially ironic, given that in 1994 BAT had attempted to secure a majority stake to gain control of ITC. It's a long way since then—the British multinational is now focused on its commitment to invest in transformation, deleverage, and enhance shareholder returns.
Business Standard
27-05-2025
- Business
- Business Standard
BAT evaluating sale of small part of ITC stake, confirms in LSE filing
British American Tobacco plc (BAT) on Tuesday said that its wholly owned subsidiary, Tobacco Manufacturers (India) Limited (TMI), intends to sell 2.3 per cent of the issued ordinary share capital in ITC Limited to institutional investors by way of an accelerated bookbuild process (block trade). As per the terms of the transaction, the deal size is pegged at $1.36 billion. The shares are being offered at ₹400, a 7.8 per cent discount to the closing price of ₹433.90 per share. As ITC goes ex-dividend by ₹7.85 per share, the discount works out to be 6.5 per cent versus the block deal discount of 8 per cent, bankers said. In a filing with the London Stock Exchange (LSE), BAT said that the transaction would provide increased financial flexibility as it delivers on its commitment to invest in transformation, deleverage, and sustainable shareholder returns. Tadeu Marroco, chief executive of BAT, said in a statement: "ITC is a valued associate of BAT in an attractive geography with long-term growth potential where BAT benefits from exposure to the world's most populous market.' 'Whilst this transaction supports delivery on our commitments to BAT shareholders, we continue to view ITC as a core strategic component of our global footprint as we partner on business opportunities in India. I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders." BAT's initial investment in ITC dates back to the early 1900s, and the two companies have a longstanding, mutually beneficial relationship, the maker of Dunhill and Lucky Strike said. Following completion of the proposed block trade, BAT will remain a significant shareholder of ITC, with a 23.1 per cent holding. Prior to this, BAT's holding in ITC was 25.45 per cent. On March 13, 2024, BAT had sold a 3.5 per cent equity stake in ITC. The block trade sale generated net proceeds, after transaction costs and taxes, of £1.6 billion, which it used to initiate its buyback programme.
