British American Tobacco Looks to Sell Down ITC Hotels Stake to Reduce Debt
(Bloomberg) --
British American Tobacco Plc has increased the size of the stake it is seeking to sell in Indian hospitality company ITC Hotels Ltd. as the maker of Lucky Strike cigarettes seeks to reduce debt.
The London-listed company, which also makes Vuse vapes, is selling 187.5 million shares, or a 9% stake, in ITC Hotels in a block trade via three subsidiaries, according to terms of the deal seen by Bloomberg News. BAT had earlier sought to sell a 7% stake.
The offering floor price was set at 205.65 rupees apiece, representing a 1% discount to the stock’s close on Thursday, the terms showed. A 9% stake would be worth about $430 million at the floor price.
BAT shares rose as much as 1.5% on Thursday after the sale was disclosed, before paring gains.
ITC Hotels is majority-owned by ITC Ltd., an Indian cigarette maker that also has other businesses including food products and packaging. Last year, BAT sold part of its stake in ITC for about $2 billion to fund a share buyback program.
BAT is under pressure to reduce debt by demerging from non-strategic holdings, and to fund investment in innovation. It has already invested significantly in research and development of alternative nicotine products, such as vapes and Velo nicotine pouches, which it says are less harmful than cigarettes.
(Updates with deal being upsized in top three paragraphs)
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