ITC’s largest stakeholder plans to liquidate part of its holdings

The management of the UK-headquartered company British American Tobacco (BAT)—which holds 29% stake in the ITC—said they are actively working on reducing their stake in the Indian tobacco major. The company announced this in its December quarter earnings call last evening.

The shares of ITC fell as much as 4% post the news as the largest shareholder in the company showed interest in reducing its stake. The company mentioned that it will continue to hold 25% stake, which implies a liquidation of 4% stake in ITC. However, it is not yet clear on how the stake sale will take place.

Being the largest shareholder in ITC, BAT would prefer to sell the stake via a strategic sale or via block deals to minimise the impact on its share price. For existing shareholders, this may not result in a major impact as it involves a mere change of hands for a big equity stake.

BAT was largely under pressure to sell the stake in ITC as it would help in reducing its existing debt. The company shares went up as much as 8% on London bourses after the announcement and its quarterly results. On the contrary, the share price of ITC fell 4% on Thursday, closing at ₹414.5. It is important to note that ITC had declared a dividend of ₹6.25 per share with a record date of 8 February 2024, and the shares were trading ex-dividend for yesterday.