BAT to buy back $895 million shares in 2024 after ITC share sale
Reuters
Published Mar 12, 2024 11:53
Updated Mar 12, 2024 13:12
(Reuters) -Shares in British American Tobacco (LON:BATS) rose on Tuesday on news the company would buy back 700 million pounds ($895 million) worth of shares this year after selling down its stake in India's ITC.
BAT's lack of share buybacks has put downward pressure on its stock since it disappointed the market by halting them last year. It said at the time it wanted to focus on reducing debt and investing in new products.
Shareholders also put pressure on BAT to reduce its stake in Indian conglomerate ITC to help it reduce its debt to its target range and to resume buybacks sooner.
Its shares rose around 3.5%, extending gains made a day earlier when news of an imminent ITC stake sale broke. They were up 3.1% as of 1232 GMT.
BAT said it would dispose of up to 437 million ordinary shares in ITC to institutional investors via an accelerated book build, cutting the Dunhill cigarette maker's shareholding to about 25.5% from about 29%.
The term sheet showed the company would sell the shares for 384-400.25 rupees per share, valuing the sale at $2 billion.
"With this transaction BAT can accelerate the start of a sustainable buyback," CEO Tadeu Marroco said, adding the company's remaining stake in ITC would continue to generate value for shareholders.
The company plans to buy back shares over a period ending December 2025, it said in a statement, starting with some 700 million pounds worth in 2024.
"Sustainable share buybacks" would now form one of four elements of its capital allocation plan, it continued, alongside reducing its net debt to within a new range of 2-2.5 times adjusted EBITDA.
Its previous target range was 2-3 times.
($1 = 0.7819 pounds)
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Written By: Reuters
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