British American Tobacco (BAT), which has a direct stake of 15 per cent in ITC Hotels, on Thursday said it will be divesting the stake at the “best moment” as it has no interest in becoming the long-term shareholder of a hotel chain in India.
Following the demerger of ITC Hotels from diversified conglomerate ITC Ltd, shares of the hospitality company were listed on the bourses on January 29.
The Kolkata-headquartered conglomerate fixed the effective date for the demerger of its Hotels business on January 1, 2025. Accordingly, the record date was fixed as January 6 to determine the shareholders of ITC Ltd to whom equity shares of ITC Hotels would be allotted pursuant to the demerger.
“BAT has no interest to become a long-term shareholder of a hotel chain in India, and as a consequence, at the right moment we will decide what is the best moment to maximize shareholder value. We will be divesting and we will be using proceeds to making sure that we get to the leverage corridor of 2.5 and 2 by 2026,” BAT Chief Executive Tadeu Marroco told analysts after declaring the company’s preliminary results for the year ended December 31, 2024.
The UK-based cigarette major is the largest shareholder of ITC Ltd with 25.45 per cent stake. BAT had sold 3.5 per cent stake in ITC Ltd in March last year through block trades to institutional investors.
“We understand the importance of cash returns to shareholders, and remain committed to our progressive dividend based upon 65 per cent of long-term sustainable earnings. Furthermore, in March 2024, we completed the monetisation of a portion of our ITC stake, lowering our holding from 29.02 per cent (December 31, 2023) to 25.45 per cent at December 31, 2024 and enabling the initiation of a sustainable share buy-back, starting with £700 million in 2024 and £900 million in 2025,” said Soraya Benchikh, Chief Financial Officer, BAT.
ITC Ltd retained a 40 per cent stake in ITC Hotels, while the remaining 60 per cent was distributed among existing shareholders. As per the share entitlement ratio of 10:1, shareholders holding 10 shares of ITC Ltd received one share of ITC Hotels post-demerger as on the record date.
