Block deal: ITC stock drops 5% as BAT offloads Rs 12,927 crore worth shares

Shares of ITC Ltd fell 5 per cent in Wednesday's trade, with its turnover touching Rs 16,200 crore within first 30 minutes into trading after multiple block deals on the counter. BAT via its arm Tobacco Manufacturers (India) offloaded 31.30 crore shares today, which accounted for 2.50 per cent of the company's total outstanding shares.  The stake was sold at Rs 413 per share for Rs 12,926.90 crore or $1,515 million. The final price  was at a 4.8 per cent discount to Tuesday's closing price of Rs 433.90 per share.

This comes a day after British American Tobacco confirmed that it was exploring the possibility of selling a 'small portion' of its stake in the FMCG company. 

Goldman Sachs (India) Securities Private Limited and Citigroup Global Markets India Private Limited were the placement agents for the deal.  ITC investors participating in the transaction will not be eligible for the dividend payment, given the T+1 settlement cycle, the final term sheet suggested. 

Following the development, the ITC stock fell 4.82 per cent to hit a low of Rs 413 on NSE. With this, ITC shares are down 13 per cent year-to-date and 1.79 per cent for the one-year period.

BAT is the largest investor in ITC, according to data from the London Stock Exchange (LSEG).

On Tuesday, BAT said that if it decides to divest its stake in ITC, the transaction would be carried out through an on-market trade. BAT had stressed that no final decision was made, and there was no certainty that a sale will occur or what the terms might be.

“A further announcement will be made if and when appropriate,” Company Secretary Caroline Ferland said in a statement.

Last year, BAT offloaded 43.69 crore shares of ITC—approximately 3.5 per cent of the company’s outstanding stock—for around $2 billion. That deal ranked as the third-largest block trade in Indian market history.

Amid renewed market speculation, BAT provided no additional details on Tuesday and reiterated that there was no assurance the sale will go ahead. The company, which owns brands like Dunhill and Lucky Strike, had continued to take a cautious approach regarding any potential transaction.

In February, BAT forecasted a modest 1 per cent growth in annual revenue, citing challenges such as tax issues in Bangladesh and Australia.