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In a major corporate development, British American Tobacco (BAT) has divested a 2.5% stake in ITC Limited, one of India’s leading conglomerates, fetching nearly ₹12,941 crore through a large-scale block deal. This strategic move is aimed at improving BAT’s financial flexibility and reshaping its global investment priorities.

The transaction, completed at a share price of ₹413, represented a discount of about 4.8% compared to ITC’s previous closing rate of ₹433.90. Around 313 million shares changed hands during this high-value deal, with Goldman Sachs and Citigroup acting as the principal bankers facilitating the sale. Following the deal’s announcement, ITC’s stock experienced a decline of approximately 3.1%, signaling short-term investor concern around the stake sale by a long-standing strategic investor.

BAT's decision to reduce its holding comes after careful review of its global investment portfolio. The sale lowers BAT’s ownership in ITC from 25.44% to 22.94%, but the multinational tobacco giant continues to remain the single largest shareholder in ITC. Despite trimming its stake, BAT reaffirmed its strategic interest in ITC, signaling that this move is more about liquidity optimization than a change in long-term confidence.

The proceeds from the stake sale are expected to be channeled toward enhancing BAT’s balance sheet. The company has outlined its intent to use the capital for debt reduction, internal investments, and funding its ongoing transformation agenda. A key area of focus includes ramping up BAT’s share buyback program for 2025, which will now see an additional infusion of £200 million—taking the total buyback size to approximately £1.1 billion ($1.49 billion).

This development also brings to the forefront the growing importance of capital efficiency among global corporations. BAT is likely aiming to respond to shareholder expectations and broader shifts in the global tobacco and wellness market. The company’s renewed focus on reducing leverage and investing in next-generation products shows its intent to remain competitive in an evolving consumer landscape.

For ITC, the block deal represents a significant shift in its shareholder structure but not necessarily a signal of reduced business potential. ITC remains one of India’s most diversified and profitable firms, with strong interests in FMCG, hotels, paperboards, and agri-business. The stock's temporary dip post-transaction is seen by many market analysts as a routine response to such a large equity offload, rather than a reflection of any fundamental weakness in the company.

As India’s equity markets continue to mature, such high-value block trades underscore both the scale of global interest in Indian companies and the need for agile capital reallocation by foreign investors. With BAT’s reshuffled investment approach and ITC’s continued domestic strength, both entities seem poised to navigate the future with renewed strategic clarity.

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