Here's what British American Tobacco is up to after selling a part of its stake in ITC
BAT has been under pressure to return more cash to shareholders. It recently took a writedown of more than £27 billion on the value of its US cigarette brands as more smokers give up the habit.
- Mar 18, 2024,
- Updated Mar 18, 2024 9:16 PM IST
British American Tobacco has reportedly started a $2 billion buyback programme after selling part of its stake in ITC.
The Lucky Strike cigarette maker told Bloomberg that the net proceeds of the ITC stake sale totaled £1.57 billion and that it will buy back as much as £1.6 billion of its own shares this year and next.
The London-listed company said it will purchase £700 million of its shares in 2024 and £900 million by the end of 2025. Interestingly, tobacco stocks globally have been on a slump since the past one year. The only exception being ITC.
BAT, Altria and Phillip Morris, all have hit a slump between 1% and 22%, whereas ITC was up 10% during the same period.
BAT, which still owns a 25% stake in ITC, was down 21%. BAT has been under pressure to return more cash to shareholders. It recently took a writedown of more than £27 billion on the value of its US cigarette brands as more smokers give up the habit, with many switching to alternatives like vapes, nicotine pouches and heated tobacco sticks. ITC now trades at Rs 420 levels.
“We expect resumption in the stock’s outperformance given our fundamental view of a moderate and infrequent cigarette tax environment and continued scale of non-cigarette businesses, important catalysts for the stock’s re-rating,” Morgan Stanley said in a report on the BAT stake sale.
British American Tobacco has reportedly started a $2 billion buyback programme after selling part of its stake in ITC.
The Lucky Strike cigarette maker told Bloomberg that the net proceeds of the ITC stake sale totaled £1.57 billion and that it will buy back as much as £1.6 billion of its own shares this year and next.
The London-listed company said it will purchase £700 million of its shares in 2024 and £900 million by the end of 2025. Interestingly, tobacco stocks globally have been on a slump since the past one year. The only exception being ITC.
BAT, Altria and Phillip Morris, all have hit a slump between 1% and 22%, whereas ITC was up 10% during the same period.
BAT, which still owns a 25% stake in ITC, was down 21%. BAT has been under pressure to return more cash to shareholders. It recently took a writedown of more than £27 billion on the value of its US cigarette brands as more smokers give up the habit, with many switching to alternatives like vapes, nicotine pouches and heated tobacco sticks. ITC now trades at Rs 420 levels.
“We expect resumption in the stock’s outperformance given our fundamental view of a moderate and infrequent cigarette tax environment and continued scale of non-cigarette businesses, important catalysts for the stock’s re-rating,” Morgan Stanley said in a report on the BAT stake sale.