BAT to divest stake in ITC Hotels at the 'right moment': Tadeu Marroco

British American Tobacco (BAT) will divest its stake in ITC Hotels “at the right moment”, its chief executive, Tadeu Marroco, said on Thursday.

 

Reiterating BAT’s position on ITC Hotels, Marroco said at a post-results analyst meet, “BAT has no interest in becoming a long-term shareholder of a hotel chain in India. And as a consequence, at the right moment, when we decide the best time to maximise shareholder value, we will be divesting. And we will be using the proceeds to ensure that we get to the leverage corridor of 2.5 and 2 by 2026.”

 

The company mentioned in its results release that the group’s direct stake in ITC Hotels is 15 per cent. At today’s closing price, BAT’s stake in ITC Hotels is valued at about Rs 5,302 crore.

 

On July 24, 2023, ITC had announced a proposed demerger of its hotels business under a scheme of arrangement, by which 60 per cent of the newly incorporated entity would be held directly by ITC’s shareholders in proportion to their holdings in ITC. BAT is the single largest shareholder in ITC.

 

Last year, BAT reinitiated its share buyback after monetising 3.5 per cent of its stake in ITC.

 

In its results release, BAT mentioned that it understands the importance of cash returns to shareholders and remains committed to a progressive dividend based on 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 as of December 31, 2024, and enabling the initiation of a sustainable share buyback, starting with £700 million in 2024 and £900 million in 2025,” it said in the release.